By BW CFO World Online Bureau
IND-RA reports it would be likely that the states’ total fiscal deficit is to be 4.1 per cent of the GDP for the FY22.
With better revenue receipts, the average fiscal deficit of states is assumed to reach up to 4.1 per cent high to the Gross Domestic Product (GDP) for the current fiscal year, reported by India-Ratings(IND-RA). The rating agency had forecast the deficit to be 4.3 per cent of the GDP for FY22. The aggregate fiscal deficit of the states was estimated at 4.6 per cent for FY21. IND-RA estimates that India’s nominal GDP will grow 15.6 per cent in FY22, higher than its previous forecast of 14.5 per cent.
“The revenue receipts of state governments are expected to improve, backed by an economic recovery, resulting from a large section of the populace receiving vaccinations. This would lead to states further easing restrictions on business and commercial activity”, the agency shared.
It is predicted that the average revenue deficit of states will come in lower at 1.3 per cent of the GDP in FY22 than the previous forecast of 1.5 per cent of the GDP.
The analysis performed by the rating agency is based on the information from 14 states for Q1FY22 being Chhattisgarh, Haryana, Jharkhand, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Odisha, Punjab, Rajasthan, Tamil Nadu, Uttarakhand, Telangana and Uttar Pradesh.
The 14 states recorded a growth of 30.8 per cent in average revenue receipts making it equal to Rs. 3.95 Crore during April-June FY22. Revenue receipts grew to a 1.5 per cent in Q1FY22 over the pre-covid period of Q1FY20.
In line with slight moderation likely with fiscal deficit, the agency predicted that the aggregate debt/GDP ratio of states to come in lower to 32.4 per cent in FY22 as compared to the previous prediction of 34 per cent.
In April-July 2021, the states’ aggregate market borrowing was lower at 1.94 lakh crore compared with Rs. 2.1 lakh crore in April-July 2020.
All states’ gross market borrowings were Rs 7.88 Lakh crore in FY21. The net market borrowing would be Rs 6.2 Lakh crore in FY22 as compared to Rs 6.45 lakh crore in FY21.