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- The Gross fiscal deficit (GFD) of states is budgeted to narrow to 3.4 per cent of gross domestic product (GDP) in 2022-23 from 4.1 per cent in 2020-21, helped by broad-based economic recovery and higher revenue collections, as per a Reserve Bank of India’s (RBI) report released report
- While states’ debt is budgeted to ease to 29.5 per cent of GDP in 2022-23 as against 31.1 per cent in 2020-21, it is still higher than the 20 per cent recommended by the FRBM Review Committee, 2018, warranting prioritisation of debt consolidation, the report – State Finances: A Study of Budgets of 2022-23 – showed.
- The report added that a glide path also needs to be set, keeping in view the need for rebuilding fiscal space to deal with future shocks. The report said that states have budgeted for higher revenue receipts in 2022-23, driven primarily by state goods and services tax (SGST), excise duties, and sales tax collections.
- States’ non-tax revenue is also expected to increase, driven by industry and general services. Tax devolution is budgeted to rise on expectations of higher revenue collections by the Centre.
- In the current fiscal, states have budgeted higher capital outlay than in 2019-20, 2020-21 and 2021-22.Going forward, increased allocations for sectors like health, education, infrastructure and green energy transition can help expand productive capacities if states mainstream capital planning rather than treating them as residuals and first stops for cutbacks to meet budgetary targets.
- States’ capital outlay-GDP ratio is likely to improve from 2.3 per cent in 2021-22 (provisional account) to 2.9 per cent in 2022-23 (budget estimate).
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Published date : 18 Jan 2023 05:56PM
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