(TH)
The Reserve Bank of India (RBI) has pointed to the fiscal stress that States are facing due to several factors including farm loan waivers, and said higher borrowing by them could crowd out private investment.
In a report ‘State Finances: A Study of Budgets of 2017-18 and 2018-19,’ the central bank noted that States’ consolidated gross fiscal deficit (GFD) overshot the budget estimates in 2017-18 due to shortfalls in own tax revenues and higher revenue expenditure.“In recent years, signs of pressures on the fiscal position of States have re-emerged,” the RBI said.
While States budgeted a gross fiscal deficit to gross domestic product (GFD-GDP) ratio of 2.7% in 2017-18, revised estimates reveal GFD-GDP ratio of 3.1%, the RBI said. “The deterioration was located in the revenue balance. In contrast, the capital account has helped to contain the GFD.”
