Page 453 - ES 2020-21_Volume-1-2 [28-01-21]

80 Economic Survey 2020-21 Volume 2

strengthen the States to deal with the pandemic, the Centre had released the 1st instalment
of SDRF amounting to ` 11,092 crore to State Governments in April 2020. In September
2020, the states’ limit for spending the SDRF during FY 2020-21 was raised to 50%, in order
to support them in containment measures of COVID-19 including measures for quarantine,
sample collection and screening; and procurement of essential equipment/ labs for response
to COVID-19.
Source: PIB

General Government Finances

2.49 The General Government finances give an overview of fiscal position of the Government
sector as a whole. Figure 13 shows the trends in General Government debt and deficits
over the past few years. The General Government liabilities as a proportion of GDP exhibit
an increasing trend over the last few years. In 2020-21 BE, the General Government had
budgeted for a reduction in deficit in over 2019-20 RE. However in the wake of the global
pandemic outbreak, the General Government (Centre plus States) is expected to register a
fiscal slippage on account of the shortfall in revenue and higher expenditure requirements. As
indicated by the enhanced borrowing provisions for both the Centre and the States for 2020-
21, the liabilities of the General Government are expected to increase. This deviation from
the path of fiscal consolidation may however be transient as the fiscal indicators may rebound
with the recovery in the economy. The medium and long term trajectory of Government debt
will depend on the debt sustainability calculations. A more negative interest-rate growth
differential lays the foundation for lower General Government debt as a proportion of GDP
(Table 13). Detailed discussion on the dynamics of debt sustainability may be seen in Chapter
2 of Volume 1.

Table 13: Trends in Interest rate-growth differential
and General Government Debt-to-GDP

Year Nominal Interest Nominal Growth Interest rate-growth General
Rate (i) rate (g) differential Government
(i-g) Debt-to-GDP

2011-12 8.52 15.74 -7.2 67.4
2012-13 8.36 13.82 -5.5 66.7
2013-14 8.45 12.97 -4.5 67.1
2014-15 8.51 10.99 -2.5 66.6
2015-16 7.89 10.46 -2.6 68.5

2016-17 7.16 11.76 -4.6 68.9
2017-18 6.97 11.09 -4.1 69.8
2018-19 7.78 10.95 -3.2 70.5
2019-20 6.85 7.21 -0.4 73.8

Source: RBI, MoSPI
Note:Nominal interest rate is the weighted average interest rate on Central Government dated securities