Hidden inter-linkages hurting growth

How fiscal pressures on state budgets are more pro-cyclical and weak imports push up bond yields

Economies are complex systems, with inter-linkages that usually do not get adequate attention, but which can have a strong effect on economic momentum and the severity of economic cycles. 

Let us start with state government spending. In popular imagination, “government” stands for the Union government in Delhi, and when companies complain of delayed payments, everyone looks to Delhi for recourse. However, not only do state governments on a net basis spend 90 per cent more than the Centre, they have much more discretion on their spending than the Centre. Nearly a fourth of central government spending, for example, is interest payments,