Thread by @GorwayGlobal

A tweet thread on #India's #Government #Finances
1. They are in a deep mess. The #Punjab #FinanceMinister came out of a #GSTCouncil meeting to suggest that the #UnionGovt may be close to a #SovereignDefault, because it is unable to p[ay out to the States's their share of GST.

See this clip here:

https://twitter.com/CNBCTV18News/status/1207324856452186113?s=20

That may be hyperbole. A sovereign default is when the Govt is so cash strapped that it is unable to service its debt. I'm not sure India is anywhere near that dire situation as yet.
But that does not mean that the Public finances are rosy. In fact they are dire in the extreme!

Hidden deep inside the Govt's accounts is something called the Gross primary deficit. I refer to it as the #GPD. Here is my data source: @rbi Monthly bulletin of 11 Dec 2019. rbidocs.rbi.org.in/rdocs/Bulletin…

Let me decipher that for you. This table gives the accounts of the #UnionGovt upto the end of Oct 2019, i.e. month 7 of the current fiscal year. It also shows what was planned in the budget. Lets recap these terms, Fiscal deficit, and GPD.

If you're with me thus far, we can look at how these numbers have panned out in the first 7 months of the year compared to the Budget estimates, i.e. the plan. Look at this table:

Remember the #GPD is simply the gap between a) the Govt's expenditure on its activites less the interest it pays out on its accumulated debt mountain
and
b) the money it raises in revenue.and other receipts (but not including fresh borrowings, borrowings are not revenue)

The GPD which was planned to be a mere 0.43 lakh crores for the whole of FY 2019-20, had ballooned in the first 7 months to a whopping 10 times that figure. that's what 995% means - an order of magnitude bigger than planned.

Now why is that? Not because interest payments have grown. At 2.9 LC to Oct they are 44 % of the annual plan. Not bec expenditure has mushroomed; at 16.5 LC it is just under 60% of what was planned. Its mainly because tax receipts are trailing at just 41 % of the annual plan

So, 7 months into the year, we are spending more than
we planned and collecting far less in taxes than was hoped. Now whether that's tax evasion or an inefficient tax dept, or #corruption (after all there must be some payback for those #ElectoralBonds) is a moot point.

But all the other evidence is that the economy is generating neither the profits nor the incomes nor the transactions in goods and services that form the bedrock of tax collection.

The real problem is that numbers have ceased to have any special meaning any more. Not in @FinMinIndia at any rate. The #5Trillion mirag has so mesmerised us that we cant see the obvious: Instead of a galloping #GDP we have a ballooning #GPD
scroll.in/article/947162…

@FinMinIndia PostScript. Another way of looking at the Govt accounts numbers to end-Oct 2019 is to express them as a %age of the annual Budget plan pro rata for 7 months (April to Oct)
In this table expenditure is running at 101%, receipts at 77% and the Gross primary deficit is at 1720% !!

@FinMinIndia It's not just a slowdown, It's the #GreatIndianSlowdown
businesstoday.in/current/slowdo…