The state of state government finances
6 years, 5 months ago

The state of state government finances

Live Mint  

Even though state governments collectively spend much more than the Union government every year, state budgets do not attract the attention they deserve. Some financial market analysts keep an eye on state budgets, but it remains largely an academic exercise since bond market investors neither reward nor punish states depending on their fiscal situations. While the deterioration in 2015-16 and 2016-17 was largely due to the takeover of debt of power distribution companies under the Ujwal Discom Assurance Yojana scheme, government finances in the last fiscal were affected by factors such as a shortfall in revenue, implementation of pay commission recommendations and farm loan waivers. More announcements of debt waivers in the run-up to crucial assembly elections later this year and the Lok Sabha election next year could further reduce fiscal space for state governments. Even though government finances should improve with the stabilization of the goods and services tax, India needs better fiscal management at both the state and Central levels to avoid crowding out the private sector.

India States State Government Loan Central Higher Recent Years Fiscal Governments State Governments Waivers Loan Waivers Finances State Government Finances Government Finances State Deficit  states  waivers  state  deficit  finances  gdp  loan  higher  governments  fiscal

History of this topic

RBI flags concerns over state sops even as tax revenue grows, spending quality improves
3 weeks, 5 days 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 …

Indian states must set glide path for fiscal consolidation, says central bank report
3 weeks, 6 days ago

Indian states must set glide path for fiscal consolidation, says central bank report

Live Mint  

MUMBAI, Dec 19 - Indian state governments must have clear and time-bound glide paths for fiscal consolidation with transparent and uniform reporting of liabilities, given the elevated debt levels, the Reserve Bank of India said in a report on Thursday. Following the strategy outlined in the federal budget 2024-25, states with elevated debt levels should establish a path for debt …

The Data Prove Government Is Spending Too Much
1 year, 3 months ago

The Data Prove Government Is Spending Too Much

Live Mint  

The U.S. national debt recently passed $33 trillion, more than 120% of gross domestic product. Total annual federal spending rose 69.4% during the decade, more than three times as fast as the 21.6% increase in the rate of population growth plus inflation. Had the federal government limited the growth in spending to a maximum of the population growth rate plus …

Reading the Union Budget with state govt spending statistics
1 year, 11 months ago

Reading the Union Budget with state govt spending statistics

Hindustan Times  

Finance minister Nirmala Sitharaman will present her fifth consecutive budget on February 1 this year. See Chart 1: Share of central and state spending in total government expenditure in India There was no significant increase in states’ fiscal deficit post-pandemic The union government’s fiscal deficit has seen a sharp increase in the wake of the pandemic. See Chart 2: centre …

Challenges of sub-national fiscal correction
2 years, 4 months ago

Challenges of sub-national fiscal correction

The Hindu  

Recent concerns over excessive doling out of freebies by States are often interpreted as intrusion into the federal powers of the States. As both the Union government and States are expected to work closely in a co-operative federal structure, frictions arising out of these exchanges might have repercussions on both resource sharing and expenditure prioritisation. While States demand more fiscal …

Why it’s time to worry about state finances
2 years, 6 months ago

Why it’s time to worry about state finances

Live Mint  

State governments are confronting various fiscal risks, particularly heavy debt, says the Reserve Bank of India’s latest bulletin. However, a rising trend in providing freebies such as free power, water, and gender-based free bus rides in many states have eaten into the expenditure pie. Power sector accounts for a large portion of states’ financial burden, since dues owed by discoms …

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 …

Opinion | Need to focus on state government finances
6 years, 5 months ago

Opinion | Need to focus on state government finances

Live Mint  

The widening of the fiscal deficit has re-emerged as a cause of concern for the Indian economy. As per a recent Reserve Bank of India report on state government finances, the consolidated fiscal deficit of the state governments in FY18 was 3.1%, against the budget estimate of 2.7%. While the state governments’ expenditure commitment has increased over time in line …

RBI says fiscal position of states is under pressure again
6 years, 6 months ago

RBI says fiscal position of states is under pressure again

Live Mint  

Mumbai: Pay revisions, interest payments and farm loan waivers are stressing state government finances yet again, the Reserve Bank of India said in a report. States have budgeted a gross fiscal deficit of 2.6% of gross domestic product during FY19, with 11 states budgeting above 3%, RBI said in its annual report titled State Finances: A Study of Budgets. “With …

Discover Related