{"id":370926,"date":"2024-02-10T11:35:42","date_gmt":"2024-02-10T06:05:42","guid":{"rendered":"https:\/\/zerodha.com\/z-connect\/?p=370926"},"modified":"2024-02-29T20:41:30","modified_gmt":"2024-02-29T15:11:30","slug":"this-week-in-data-for-dummies-reviewing-the-interim-budget","status":"publish","type":"post","link":"https:\/\/zerodha.com\/z-connect\/subtext\/this-week-in-data-for-dummies-reviewing-the-interim-budget","title":{"rendered":"It\u2019s the economy, stupid: Reviewing the interim budget"},"content":{"rendered":"<p>We love India Data Hub\u2019s weekly newsletter, \u2018<a href=\"https:\/\/indiadatahub.substack.com\/\"><em>This Week in Data<\/em><\/a>\u2019, which neatly wraps up all major macroeconomic data stories for the week. We love it so much, in fact, that we\u2019ve taken it upon ourselves to create a simple, digestible version of their newsletter for those of you that don\u2019t like econ-speak. Think of us as a cover band, reproducing their ideas in our own style. Attribute all insights, here, to India Data Hub. All mistakes, of course, are our own.<\/p>\n<hr \/>\n<p>Last week, the government released an \u201cinterim budget\u201d &#8211; a short budget for the months before the new Lok Sabha assumes power. People look happy with how the budget: (a) increased capital expenditure, while (b) lowering fiscal deficit further.<\/p>\n<p><strong>Spare me the jargon, please.<\/strong><\/p>\n<p>Let\u2019s slow down for a moment. Here\u2019s what this means:<\/p>\n<ul>\n<li>Capital expenditure (or if you like sounding fancy, capex) is the money one spends, at one go, on things that will be around for a while. You get something new for the money you spend on capex &#8211; highways, airports, buildings &#8211; something you\u2019ll use for years. Think of how different it feels to spend thirty thousand on rent, compared to buying a TV for the same amount. You\u2019re paying rent to simply maintain life as it is. You\u2019ll pay it again next month, and the month after that. The TV, however, is a new addition to your life: with it, you\u2019ll live in more luxury than you did before. This is why people like higher levels of capital expenditure. That money buys one a better life in the future.<\/li>\n<li>Our government usually spends more money than it earns, filling the gap by borrowing money. This gap between its expenditure and income is its fiscal deficit.<\/li>\n<\/ul>\n<p><strong>Sure. So what\u2019s happening?<\/strong><\/p>\n<p>Two things:<\/p>\n<ul>\n<li>One, the government expects that its capex (at least if you include the money it\u2019s sending over to states for their capex) will be 18% higher than it was last year. More than 30% of its expenses, this year, will be for capex.<\/li>\n<li>Two, it hopes to bring its fiscal deficit down to 5.1% of India\u2019s gross domestic product, falling from 5.8% last year. This is the lowest it has been since the COVID-19 pandemic hit.<\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">In essence, this year, the government expects to spend <\/span><i><span style=\"font-weight: 400;\">more <\/span><\/i><span style=\"font-weight: 400;\">in its long-term future, even while it borrows <\/span><i><span style=\"font-weight: 400;\">less<\/span><\/i><span style=\"font-weight: 400;\"> money than before.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Take a look at these graphs for the full picture. <\/span><\/p>\n<p><a href=\"https:\/\/zerodha.com\/z-connect\/wp-content\/uploads\/2024\/02\/00082bd9-6438-4ec8-a652-e42e7dfeaec7_2365x1557.png\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-370927 aligncenter\" src=\"https:\/\/zerodha.com\/z-connect\/wp-content\/uploads\/2024\/02\/00082bd9-6438-4ec8-a652-e42e7dfeaec7_2365x1557.png\" alt=\"\" width=\"2365\" height=\"1557\" srcset=\"https:\/\/zerodha.com\/z-connect\/wp-content\/uploads\/2024\/02\/00082bd9-6438-4ec8-a652-e42e7dfeaec7_2365x1557.png 2365w, https:\/\/zerodha.com\/z-connect\/wp-content\/uploads\/2024\/02\/00082bd9-6438-4ec8-a652-e42e7dfeaec7_2365x1557-300x198.png 300w, https:\/\/zerodha.com\/z-connect\/wp-content\/uploads\/2024\/02\/00082bd9-6438-4ec8-a652-e42e7dfeaec7_2365x1557-1024x674.png 1024w, https:\/\/zerodha.com\/z-connect\/wp-content\/uploads\/2024\/02\/00082bd9-6438-4ec8-a652-e42e7dfeaec7_2365x1557-768x506.png 768w, https:\/\/zerodha.com\/z-connect\/wp-content\/uploads\/2024\/02\/00082bd9-6438-4ec8-a652-e42e7dfeaec7_2365x1557-1536x1011.png 1536w, https:\/\/zerodha.com\/z-connect\/wp-content\/uploads\/2024\/02\/00082bd9-6438-4ec8-a652-e42e7dfeaec7_2365x1557-2048x1348.png 2048w\" sizes=\"auto, (max-width: 2365px) 100vw, 2365px\" \/><\/a><\/p>\n<p><b>That\u2019s brilliant! Do we pull out the fireworks?<\/b><\/p>\n<p><span style=\"font-weight: 400;\">Hold on there. Remember, this is an <\/span><i><span style=\"font-weight: 400;\">interim<\/span><\/i><span style=\"font-weight: 400;\"> budget. Take whatever it says with a grain of salt.\u00a0<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">One, it won\u2019t be fair to the new Lok Sabha to be elected later this year if the outgoing one announces major new expenses or schemes. After all, <\/span><i><span style=\"font-weight: 400;\">they<\/span><\/i><span style=\"font-weight: 400;\"> will actually run the country for most of the year. So, as a matter of protocol, the current government has refrained from big announcements &#8211; at least that\u2019s how it looks from what Finance Minister Nirmala Sitharaman has been telling the media. If new schemes or policies do come in later, all these figures could go for a toss. For a better sense of things, wait for the <\/span><i><span style=\"font-weight: 400;\">full<\/span><\/i><span style=\"font-weight: 400;\"> budget that will come after the elections.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Two, the elections themselves might push the government to change its course. Of course, if there\u2019s a change in the party in power, you could see a complete reversal in policy. But even if the ruling NDA carries on, these elections will signal how voters think of its current approach. If it ends up losing votes because people didn\u2019t think it was spending enough, for instance, it may decide to do things differently. And if it finds itself leaning on other parties to form the government, they\u2019ll get a say in the budget as well.\u00a0<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Trust the interim budget numbers as much as you\u2019d trust a TV meteorologist speculating on next week\u2019s weather. <\/span><\/p>\n<p><b>Oh. So you\u2019re saying there\u2019s no point in reading further?<\/b><\/p>\n<p><span style=\"font-weight: 400;\">No, no! Wait!\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">See, while the budget\u2019s <\/span><i><span style=\"font-weight: 400;\">future <\/span><\/i><span style=\"font-weight: 400;\">projections mean very little, the revised estimates for Fiscal 2024 throw up some surprises.\u00a0<\/span><\/p>\n<p><b>Revised <\/b><b><i>what<\/i><\/b><b> now?\u00a0<\/b><\/p>\n<p><span style=\"font-weight: 400;\">The budget doesn\u2019t only look at the next year. It also looks backwards. A lot can change between the opening of a fiscal year and mid-way through when the government\u2019s expectations collide with reality. So, alongside the budget, the government puts out a set of \u2018revised estimates\u2019, updating its expectations for the ongoing year.<\/span><\/p>\n<p><b>Cool. Now surprise me.<\/b><\/p>\n<p><span style=\"font-weight: 400;\">Here\u2019s the big one: the government thinks this year\u2019s tax revenues will be a little poorer than it hoped at the beginning of this year. Here\u2019s why:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The government doesn\u2019t think it\u2019ll be pulling in a lot of tax this quarter. Collections actually grew at a healthy 14.4% between April and December, compared to the same period last year. This quarter, though, will see growth drop to 8%.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">On top of this, the central government will be sending over a lot more tax money to states than it budgeted for.\u00a0<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">These charts should clear things up.<\/span><\/p>\n<p><a href=\"https:\/\/zerodha.com\/z-connect\/wp-content\/uploads\/2024\/02\/b42643f1-5827-4b9b-908b-d06039526dea_2357x1578.png\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-370928 aligncenter\" src=\"https:\/\/zerodha.com\/z-connect\/wp-content\/uploads\/2024\/02\/b42643f1-5827-4b9b-908b-d06039526dea_2357x1578.png\" alt=\"\" width=\"2357\" height=\"1578\" srcset=\"https:\/\/zerodha.com\/z-connect\/wp-content\/uploads\/2024\/02\/b42643f1-5827-4b9b-908b-d06039526dea_2357x1578.png 2357w, https:\/\/zerodha.com\/z-connect\/wp-content\/uploads\/2024\/02\/b42643f1-5827-4b9b-908b-d06039526dea_2357x1578-300x201.png 300w, https:\/\/zerodha.com\/z-connect\/wp-content\/uploads\/2024\/02\/b42643f1-5827-4b9b-908b-d06039526dea_2357x1578-1024x686.png 1024w, https:\/\/zerodha.com\/z-connect\/wp-content\/uploads\/2024\/02\/b42643f1-5827-4b9b-908b-d06039526dea_2357x1578-768x514.png 768w, https:\/\/zerodha.com\/z-connect\/wp-content\/uploads\/2024\/02\/b42643f1-5827-4b9b-908b-d06039526dea_2357x1578-1536x1028.png 1536w, https:\/\/zerodha.com\/z-connect\/wp-content\/uploads\/2024\/02\/b42643f1-5827-4b9b-908b-d06039526dea_2357x1578-2048x1371.png 2048w\" sizes=\"auto, (max-width: 2357px) 100vw, 2357px\" \/><\/a><\/p>\n<p><b>What!? Are we poor now?<\/b><\/p>\n<p><span style=\"font-weight: 400;\">Nah, not really. On the whole, the government\u2019s doing OK.<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">See, the government doesn\u2019t just earn from taxes. It has \u2018non-tax revenues\u2019: everything from the profits of <\/span><i><span style=\"font-weight: 400;\">sarkaari <\/span><\/i><span style=\"font-weight: 400;\">companies, to the fees it charges for its services, to rent it receives when a company uses its land or buildings. This year, these have well exceeded our expectations.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">This is true even though the government was unable to sell shares of <\/span><i><span style=\"font-weight: 400;\">sarkaari<\/span><\/i><span style=\"font-weight: 400;\"> companies at the rate it hoped. (To be fair, these \u2018disinvestment\u2019 targets were only met six times in the last three decades).<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">In all, the government earned a tiny bit more money than it expected &#8211; for the third straight year.<\/span><\/p>\n<p><b>So, all that build-up for nothing? Things were just as we expected?\u00a0<\/b><\/p>\n<p><span style=\"font-weight: 400;\">Well\u2026 yes <\/span><i><span style=\"font-weight: 400;\">and <\/span><\/i><span style=\"font-weight: 400;\">no?\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Top-line: the government isn\u2019t really in dire straits, this year. It can spend what it planned to, without blowing up its fiscal deficit or anything. And that\u2019s pretty much what has happened, as this chart will tell you:\u00a0<\/span><\/p>\n<p><a href=\"https:\/\/zerodha.com\/z-connect\/wp-content\/uploads\/2024\/02\/a7864732-d8e8-4617-8c72-2b62725d2859_2366x1569.png\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-370929 aligncenter\" src=\"https:\/\/zerodha.com\/z-connect\/wp-content\/uploads\/2024\/02\/a7864732-d8e8-4617-8c72-2b62725d2859_2366x1569.png\" alt=\"\" width=\"2366\" height=\"1569\" srcset=\"https:\/\/zerodha.com\/z-connect\/wp-content\/uploads\/2024\/02\/a7864732-d8e8-4617-8c72-2b62725d2859_2366x1569.png 2366w, https:\/\/zerodha.com\/z-connect\/wp-content\/uploads\/2024\/02\/a7864732-d8e8-4617-8c72-2b62725d2859_2366x1569-300x199.png 300w, https:\/\/zerodha.com\/z-connect\/wp-content\/uploads\/2024\/02\/a7864732-d8e8-4617-8c72-2b62725d2859_2366x1569-1024x679.png 1024w, https:\/\/zerodha.com\/z-connect\/wp-content\/uploads\/2024\/02\/a7864732-d8e8-4617-8c72-2b62725d2859_2366x1569-768x509.png 768w, https:\/\/zerodha.com\/z-connect\/wp-content\/uploads\/2024\/02\/a7864732-d8e8-4617-8c72-2b62725d2859_2366x1569-1536x1019.png 1536w, https:\/\/zerodha.com\/z-connect\/wp-content\/uploads\/2024\/02\/a7864732-d8e8-4617-8c72-2b62725d2859_2366x1569-2048x1358.png 2048w\" sizes=\"auto, (max-width: 2366px) 100vw, 2366px\" \/><\/a><\/p>\n<p><span style=\"font-weight: 400;\">The revised estimate for this year\u2019s expenditure is 99.7% of what was budgeted &#8211; the total difference between the two coming to \u20b9 12,600 crore. Sure, that seems like a lot, but compared to <\/span><i><span style=\"font-weight: 400;\">every single rupee the Indian government spends<\/span><\/i><span style=\"font-weight: 400;\">, it\u2019s a mere rounding error. It certainly doesn\u2019t look like the government is tightening its belts.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The funny thing, though, is that this money has been spent on very different things from what we first planned.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Small digression: the government has a surprising amount of control over how much expenditure it shows in a year, because it follows the \u2018cash system\u2019 of accounting.\u00a0<\/span><\/p>\n<p><strong>I swear I\u2019ll shut this window if you throw more jargon at me.<\/strong><\/p>\n<p><span style=\"font-weight: 400;\">Sorry, sorry. I\u2019ll explain.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Let\u2019s say we strike a deal &#8211; I\u2019ll buy a carton of mangoes from you for a thousand bucks. You send a carton over to me promptly. But I dither and sit on your bills for months, only paying you in July after you threaten to smash my head in while I\u2019m asleep.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">When I eventually sit with my books, there are two ways I can account for the expense. I can pencil in the fact that I have to pay you as soon as you send the mangoes my way: this would be <\/span><i><span style=\"font-weight: 400;\">accrual basis<\/span><\/i><span style=\"font-weight: 400;\"> accounting. Or, I can only note the expense once the money leaves my account: this would be <\/span><i><span style=\"font-weight: 400;\">cash basis <\/span><\/i><span style=\"font-weight: 400;\">accounting. This small choice alters the <\/span><i><span style=\"font-weight: 400;\">time <\/span><\/i><span style=\"font-weight: 400;\">at which I officially spend money. On an accrual basis, the expense would show up in my books this financial year. On a cash basis, it would only come up in June, in the next financial year.\u00a0<\/span><\/p>\n<p><b>Mm-hmm. Go on.<\/b><\/p>\n<p><span style=\"font-weight: 400;\">Because the government only recognises expenses when money actually leaves its coffers, it can rack up expenses this year without them appearing in this year\u2019s revised estimates, if it delays some payments a little. If it wants its initial estimates to <\/span><i><span style=\"font-weight: 400;\">look<\/span><\/i><span style=\"font-weight: 400;\"> accurate, that\u2019s very much an option. And when final estimates diverge greatly from the initial ones, that too is a choice.<\/span><\/p>\n<p><b>Right. Back to the point: how have expenses changed? <\/b><\/p>\n<p><span style=\"font-weight: 400;\">The government has increased its revenue expenditure by \u20b9 38,000 crore over what was budgeted.\u00a0<\/span><\/p>\n<p><b>Really? <\/b><b><i>More <\/i><\/b><b>jarg-<\/b><\/p>\n<p><span style=\"font-weight: 400;\">Hey, I\u2019m getting to it!<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u2018Revenue expenditure\u2019 is the day-to-day expenditure the government makes to simply keep things running as usual. It\u2019s the kind of money that goes into salaries, maintaining buildings, paying interest on loans, or running government programs.\u00a0<\/span><\/p>\n<p><b>Ok. So what\u2019s happening?\u00a0<\/b><\/p>\n<p><span style=\"font-weight: 400;\">Some short-term spending has come down this year. Many more have been pumped up. Here\u2019s the break-down:<\/span><\/p>\n<p>Five types of expenses have jumped up this year:<\/p>\n<ul>\n<li>Subsidies<\/li>\n<li>Defence (the day-to-day stuff, not for new equipment)<\/li>\n<li>Education<\/li>\n<li>The rural employment guarantee<\/li>\n<li>The Agricultural Infrastructure Fund<\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Taken together, we\u2019ve spent an incredible \u20b9 1.3 lakh crores <\/span><i><span style=\"font-weight: 400;\">more than we initially thought we would <\/span><\/i><span style=\"font-weight: 400;\">on just these five things.\u00a0<\/span><\/p>\n<ul>\n<li>On the other hand, the central government has given away a lot less money to states. Here\u2019s the thing: states have many jobs they must perform, and they don\u2019t always have the money for it. The central government steps in to help, giving them extra money as \u2018grants\u2019 to bridge the gap. Only, this year, these grants have gone down by a lot. Like, by \u20b9 75,000 crores.<\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">This chart should help you wrap your head around this: <\/span><\/p>\n<p><a href=\"https:\/\/zerodha.com\/z-connect\/wp-content\/uploads\/2024\/02\/bb9608f4-79c9-44c4-a0fe-b299b805de41_2366x1572.png\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-370930 aligncenter\" src=\"https:\/\/zerodha.com\/z-connect\/wp-content\/uploads\/2024\/02\/bb9608f4-79c9-44c4-a0fe-b299b805de41_2366x1572.png\" alt=\"\" width=\"2366\" height=\"1572\" srcset=\"https:\/\/zerodha.com\/z-connect\/wp-content\/uploads\/2024\/02\/bb9608f4-79c9-44c4-a0fe-b299b805de41_2366x1572.png 2366w, https:\/\/zerodha.com\/z-connect\/wp-content\/uploads\/2024\/02\/bb9608f4-79c9-44c4-a0fe-b299b805de41_2366x1572-300x199.png 300w, https:\/\/zerodha.com\/z-connect\/wp-content\/uploads\/2024\/02\/bb9608f4-79c9-44c4-a0fe-b299b805de41_2366x1572-1024x680.png 1024w, https:\/\/zerodha.com\/z-connect\/wp-content\/uploads\/2024\/02\/bb9608f4-79c9-44c4-a0fe-b299b805de41_2366x1572-768x510.png 768w, https:\/\/zerodha.com\/z-connect\/wp-content\/uploads\/2024\/02\/bb9608f4-79c9-44c4-a0fe-b299b805de41_2366x1572-1536x1021.png 1536w, https:\/\/zerodha.com\/z-connect\/wp-content\/uploads\/2024\/02\/bb9608f4-79c9-44c4-a0fe-b299b805de41_2366x1572-2048x1361.png 2048w\" sizes=\"auto, (max-width: 2366px) 100vw, 2366px\" \/><\/a><\/p>\n<p><b>But how about the nice spending you mentioned at the top, with all the new stuff? Sounded like\u2026 <\/b><b><i>cabbage<\/i><\/b><b>, I think?<\/b><\/p>\n<p><span style=\"font-weight: 400;\">Capex? Well, that\u2019s a doozy:\u00a0<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The revised estimates peg the central government\u2019s capex this year at a full 5% lower than was budgeted at the beginning. Doesn\u2019t sound like a big deal? Well, try this: the total gap between the two is \u20b9 50,000 crore. <\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\">There\u2019s more. That massive shortfall in grants to states above? Most of it was supposed to be for capex as well.<\/li>\n<\/ul>\n<p>In all, this year has probably seen 7% less government capex than we thought we would. That\u2019s a total drop of almost \u20b9 1 lakh crore.<\/p>\n<p>Even worse, states have also seen fewer loans and advances come through from the Centre this year. All this means significantly less state government capex across the country than one expected.<\/p>\n<p><a href=\"https:\/\/zerodha.com\/z-connect\/wp-content\/uploads\/2024\/02\/cc9dfd84-ecd0-4318-ba58-ff3198b34abd_2358x1555.png\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-370931\" src=\"https:\/\/zerodha.com\/z-connect\/wp-content\/uploads\/2024\/02\/cc9dfd84-ecd0-4318-ba58-ff3198b34abd_2358x1555.png\" alt=\"\" width=\"2358\" height=\"1555\" srcset=\"https:\/\/zerodha.com\/z-connect\/wp-content\/uploads\/2024\/02\/cc9dfd84-ecd0-4318-ba58-ff3198b34abd_2358x1555.png 2358w, https:\/\/zerodha.com\/z-connect\/wp-content\/uploads\/2024\/02\/cc9dfd84-ecd0-4318-ba58-ff3198b34abd_2358x1555-300x198.png 300w, https:\/\/zerodha.com\/z-connect\/wp-content\/uploads\/2024\/02\/cc9dfd84-ecd0-4318-ba58-ff3198b34abd_2358x1555-1024x675.png 1024w, https:\/\/zerodha.com\/z-connect\/wp-content\/uploads\/2024\/02\/cc9dfd84-ecd0-4318-ba58-ff3198b34abd_2358x1555-768x506.png 768w, https:\/\/zerodha.com\/z-connect\/wp-content\/uploads\/2024\/02\/cc9dfd84-ecd0-4318-ba58-ff3198b34abd_2358x1555-1536x1013.png 1536w, https:\/\/zerodha.com\/z-connect\/wp-content\/uploads\/2024\/02\/cc9dfd84-ecd0-4318-ba58-ff3198b34abd_2358x1555-2048x1351.png 2048w\" sizes=\"auto, (max-width: 2358px) 100vw, 2358px\" \/><\/a><\/p>\n<p><b>Huh. What should I make of this? <\/b><\/p>\n<p><span style=\"font-weight: 400;\">For one, this is a good reminder that any expenditure pattern put out in a budget is simply the government telling you what it <\/span><i><span style=\"font-weight: 400;\">wants <\/span><\/i><span style=\"font-weight: 400;\">to do. It hasn\u2019t really done anything at this point. What it <\/span><i><span style=\"font-weight: 400;\">finally<\/span><\/i><span style=\"font-weight: 400;\"> does, later, could be very different. Would you congratulate someone for simply telling you, on New Year\u2019s Day, that they plan to eat healthy and hit the gym this entire year? No, right? Bring that skepticism to budget announcements as well.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Even so. Why was there <\/span><i><span style=\"font-weight: 400;\">such<\/span><\/i><span style=\"font-weight: 400;\"> a drastic shift? There are two possible answers:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">There\u2019s a <\/span><i><span style=\"font-weight: 400;\">good<\/span><\/i><span style=\"font-weight: 400;\"> answer: this was the last year of the current government, after all. Maybe it simply felt pressured to rack up day-to-day expenses, and when those got too high, cut down on capex instead. That\u2019s alright. The government can always pivot once the elections are through.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">And then, there\u2019s the <\/span><i><span style=\"font-weight: 400;\">bad <\/span><\/i><span style=\"font-weight: 400;\">answer: Maybe we\u2019ve saturated all the capex we can do. After all, the government\u2019s capex has jumped by 2.5 times in just these last four years. If so, the problem is not that we didn\u2019t have money to spend. Maybe it\u2019s that there\u2019s nowhere else to put money, and so, we\u2019ve been <\/span><i><span style=\"font-weight: 400;\">forced<\/span><\/i><span style=\"font-weight: 400;\"> to drive up recurring expenses instead. If so, capex will no longer be a thing the government can focus on in the years to come.\u00a0<\/span><\/li>\n<\/ul>\n<p>Thanks for reading.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Simplified review of the interim budget.<\/p>\n","protected":false},"author":242542,"featured_media":371433,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[532],"tags":[],"class_list":["post-370926","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-subtext"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v23.5 (Yoast SEO v26.6) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>It\u2019s the economy, stupid: Reviewing the interim budget &#8211; 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