States’ fiscal deficit to narrow to 4.3% of GDP in FY22: Ind-Ra
16th February, 2021
The aggregate fiscal deficit of States is likely to be at 3% of the gross domestic product (GDP) in 2021-22 compared with 4.6% in 2020-21, says a report by India Ratings and Research.
The rating agency has revised the outlook on State finances to stable for FY22 from stable-to-negative.
It had earlier forecast FY21 fiscal deficit of States to be at 4.5%, but revised it later due to a sharper-than-expected contraction of 6.1% year-on-year (y-o-y) in the nominal GDP.
The report said due to the economic downturn, even the union government’s finances are under pressure, leading to a lower-than-budgeted devolution of Rs. 5.50 lakh crore to States in FY21 (revised estimate: RE) as against the budget estimate (BE) of Rs. 8.03 lakh crore.