- 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.
https://www.thehindu.com/todays-paper/tp-business/states-fiscal-deficit-to-narrow-to-43-of-gdp-in-fy22-ind-ra/article33846378.ece
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