When the Union budget was presented this year, fiscal consolidation was supposed to be a top priority for the government. At that time, and now as well, the proposed level of compression was held to be a wee bit optimistic.
During the April-June quarter, expenditure galloped ahead of the budgeted estimate by six percentage points. While this may not look overtly pessimistic, things can sour quickly.
Two dark clouds loom. One, if the monsoon continues at its current pace, states will need help and that will fuel more expenditure. Two, if growth continues to be weak, revenue collection will certainly falter. Both factors are bound to increase the fiscal deficit further.
While the monsoon is not in the government’s control, other factors were in its control. That, anyway, has been the story of this government for three years now.