Govt may have to cut capital spending by Rs 700 bn, says SBI report

Growth in Q4 could be below 7%; this is largely due to shortfall in GST collections

The shortfall in goods and services tax (GST) collection would severely affect the spending ability of the government this fiscal, a report by State Bank of India’s research wing has said. The cut in federal spending could be a massive Rs 700 billion, which is about a fourth of the capital expenditure for 2018-19.

This cut would be twice the Rs 363 billion reduction in capital spending the government did in 2017-18 in order to restrict fiscal deficit at 3.5 per cent of the gross domestic product (GDP).

Coupled with an “inevitable” slowdown in global growth, this would have a substantial impact