The government has announced its fiscal position till end-February this year. The accompanying chart shows that the central government has given a substantial fiscal stimulus to the economy in fiscal year 2018 (FY18).

As the chart shows, most of the rise has been in revenue expenditure, although in percentage terms, the increase in capital expenditure is much higher.

This rise in government capex (capital expenditure), along with brownfield expansion in the private sector, has been supporting investment demand.

The measure of the stimulus is the fiscal deficit, which, as the chart shows, was up 18.2% at the end of February compared to last year. For the full year FY18, the budget’s revised estimates had shown an 8.8% increase compared to FY17. Either the government has pruned the deficit dramatically in March, or there will be a slippage in the fiscal deficit for the year.

For FY19, the government has budgeted for a mere 4.9% increase in the fiscal deficit amount, from the revised estimates.

That means either the government stimulus will be lower, or, more likely in a pre-election year, the deficit will be higher than budgeted.