Recovery in economic growth may be marred by drastic expenditure cuts

The economy is required to grow by 5.2 per cent in the second half compared to 4.8 per cent in the first half to enable it to clock five per cent in the entire FY20

Early signs from lead indicators are showing some recovery in economic growth. However, drastic expenditure cuts by the Centre and state governments may drag down the expansion to even below five per cent, which has been pegged by the advance estimates for 2019-20.

If the Centre cuts expenditure by Rs 2 trillion, coupled with outlay compression by states, the growth rate would be severely hit, warn economists.

“While some lead indicators have offered encouraging signs, the growing likelihood of expenditure cuts by the central and state governments pose key downside risk to achieving the targeted growth rate,” said Aditi Nayar,