Data dive: How freebies are hurting already stressed state finances
1 month ago

Data dive: How freebies are hurting already stressed state finances

Live Mint  

Maharashtra and Jharkhand are going to polls amid heated campaigns that saw ideological clashes, political wrangling, and promises of several free goods and services, colloquially known as freebies. Most states that went to polls in 2023 or 2024 saw their fiscal deficit as a share of the gross state domestic product rise compared to the previous non-election year, showed a Mint analysis based on the fiscal data of 19 large states by Emkay Global. States’ revenue receipts grew just 7% in 2023-24 compared to double-digit growth seen in the previous two fiscal years, according to data from Emkay Global. Overall revenues have been dragged down by slow growth in states’ own tax revenue streams such as sales tax/value added tax and excise. With states’ propensity to slip on their budgeted revenue and expenditure plans high, promises of free goods and services add another layer of pressure.

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History of this topic

RBI flags concerns over state sops even as tax revenue grows, spending quality improves
4 days, 6 hours ago

RBI flags concerns over state sops even as tax revenue grows, spending quality improves

Live Mint  

Mumbai: India’s banking regulator has flagged concerns about a slew of sops announced by several states, even as their tax revenue has grown faster than the economic growth rate after the pandemic year of FY21, and spending quality improved in favour of more productive asset creation. Even as capital expenditure is projected to increase this year, states are expected to …

Budget 2024 and the impact of the general elections
5 months ago

Budget 2024 and the impact of the general elections

Live Mint  

Popular expectations had settled on the notion that the outcome of Election2024 would influence the tenor and direction of Budget2025. The ambition on agriculture reforms, the ₹1.1-trillion infrastructure push, development of industrial parks with states to spur manufacturing, urban development plans and ramp-up of skilling, among others, are all projects that envisage intense cooperation between the Centre and states. FM …

The overlooked importance of state budgets in the era of freebies
5 months, 2 weeks ago

The overlooked importance of state budgets in the era of freebies

Firstpost  

When states provide benefits like free bus rides and electricity, they often overlook the long-term financial implications and rely on the Central government to bail them out, despite making financially unsustainable decisions The history of Union Budgets is a tale that begins in 1733 when Sir Robert Walpole, regarded as the first Prime Minister of Great Britain, stood in the …

State economy clocked 12.01% growth in 2021-22: Economic Review
1 year, 10 months ago

State economy clocked 12.01% growth in 2021-22: Economic Review

The Hindu  

The State economy posted a ‘‘strong recovery’‘ in 2021-22 with the Gross State Domestic product clocking a 12.01% growth at constant prices, the Economic Review 2022 published on Thursday said. The annual growth rate of public debt decreased from 14.34% to 10.16%, and the public debt-GSDP ratio from 25.90% to 24.26% in 2021-22 compared to the previous fiscal. State’s own …

Fiscal deficit of states to hit peak of ₹8.7 lakh crore, says CRISIL
3 years, 11 months ago

Fiscal deficit of states to hit peak of ₹8.7 lakh crore, says CRISIL

The Hindu  

The States are headed for a fourfold expansion in their revenue deficit this fiscal over the last year due to far lesser tax collections, Crisil Ratings said in a report. “This will not only expand States’ aggregate gross fiscal deficit to an all-time high of ₹8.7 lakh crore, or 4.7% of GSDP, but also skew its composition towards revenue deficit …

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