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54 Economic Survey 2021-22

capital spending takes place in the second half of the year, which is not being captured with the
available data. The focus of capital expenditure from April to November 2021 has been directed
towards infrastructure-intensive sectors like roads and highways, railways, and housing and
urban affairs (Figure 12). In addition, the Centre has also put in place several incentives to boost
the capital expenditure by the States (discussed in Box 3).
Figure 11: YoY growth in Capital Expenditure Figure 12: Emphasis sectors for
during April to November over the years Capital expenditure (April to
November 2021) (In ` crore)
16
14 11.7 12.8 13.5 Road transport and
12 highways 73907
10
Percentage 8 Railways 65157

6
4 4.0
2
0 Housing & Urban 16891
Apr-Nov Apr-Nov Apr-Nov Apr-Nov affairs
2018 2019 2020 2021
Source: CGA Monthly Accounts Source: CGA Monthly Accounts

2.19 Based on the above analysis, it may be seen that the agile fiscal policy approach adopted
by the Government, coupled with the buoyant revenue collection received so far this year, has
created headroom for taking up additional fiscal policy interventions based on the need of the
evolving situation. The targeted focus on capital expenditure, with its resulting multiplier effects,
will be vital in sustaining the economic growth. As the economy grows further, the revenue
collection from all the sources is expected to be more robust, which will help to strengthen the
fiscal position on one hand, and create fiscal space on the other. Thus, it is expected that reaching
the budget estimate for fiscal deficit during 2021-22 will not be a concern for the Central
Government. A robust economic growth path and various tax policy and administration reforms
undertaken over the last few years will be fundamental in sustaining the buoyant revenues in
the medium term, and thus, be on track with the fiscal path outlined by the Medium-Term Fiscal
Policy Statement.

LONG-TERM TRENDS IN GOVERNMENT FINANCES: CENTRE,
STATES AND GENERAL GOVERNMENT

Central Government Finances

2.20 During the year 2020-21, the shortfall in revenue collection owing to the interruption in
economic activity and the additional expenditure requirements to mitigate the fallout of the
pandemic on vulnerable people, small businesses, and the economy in general, created immense
pressure on the available limited fiscal resources. As a result, the budgeted fiscal deficit for
2020-21 was revised from 3.5 per cent in BE to 9.5 per cent in RE. The fiscal deficit for 2020-21
Provisional Actuals stood at 9.2 per cent of GDP i.e. lower than RE (Figure 13). The Medium-
Term Fiscal Policy (MTFP) Statement presented with Budget 2021-22 envisaged a fiscal deficit