Government Spending During July-Sept Quarter Lowest In 6 Years

The Indian economy shrank for two straight quarters and is technically trapped in the recession. To speed up the economic activity stalled due to the COVID-19 lockdown, the government announced a stimulus package of Rs 20 lakh crore, launched 'Atmanibhar Bharat' and other new schemes so that more money would come in the hands of the people but the situation is completely reversed. In the last July-September quarter, the money that the government spent was the least in the last six years.

As per data released by the National Statistics Office (NSO), the administration and defence sector continued to witness a steep decline in the second quarter of FY21. For example, in the first quarter of the current fiscal, where the administration and defence sector shrank by 10.3%, in the second quarter this figure further widened to -12.2%. The figure was 10.3% in the second quarter of the last financial year.

The biggest reason for the shrinking of this sector is the decrease in government spending. While the government spent Rs 7,26,278 crore in the first quarter of FY21, this figure was reduced to Rs 5,61,812 crore in the second quarter of July-September. To compare it with the July-September quarter of last fiscal, then it shows that the government has spent less than the previous year. This figure was Rs 6,85,212 crore last year.

The graph reveals how government expenditure grew by 25% in FY15, but by the second quarter of FY 2021, it shrank -22.1%.

Put simply, the government is infusing less money in the economy than before. According to economists, the government should spend more during this time so that the consumers' purchasing power increases, a must for turning the wheel of the economy. But the problem of the government is that its coffers are empty.