Mumbai, Dec 1 (IANS) The pandemic-induced lockdown and consequent slump in economic activity will increase states’ indebtedness to atleast 36 per cent this fiscal – the highest in a decade, said ratings agency Crisil Ratings.
“This is mainly attributable to falling goods and services tax (GST) collections and sticky revenue expenditure of states,” the ratings agency said in a report.
The report is based on a Crisil’s study of the top 18 states, which account for 90 per cent of the aggregate gross state domestic product (GSDP).
The ratings agency said that states’ overall revenues are estimated to decline almost 15 per cent on-year this fiscal in line with a shrinking economy.
It pointed out that all revenue sources of the states will take a hit, with almost 65 per cent of the decline attributable to a fall in State GST collections, GST compensation payments, and tax devolutions to the states from the centre’s own tax pool, which together form nearly 50 per cent of states’ revenue receipts.
According to Manish Gupta, Senior Director, CRISIL Ratings: “Amid falling revenue receipts, states’ revenue expenditures would remain largely sticky due to high committed expenditures and essential developmental expenditures.”
“These cumulatively contribute to about 75-80 per cent of the total revenue expenditure and will be difficult to cut down.”
Last week, official data showed that India’s budgetary fiscal deficit for the April-October 2020-21 period stood at Rs 9.53 lakh crore, or 119.7 per cent of the budget estimates (BE).
The 2020-21 deficit — the difference between revenue and expenditure — had been pegged at Rs 7.96 lakh crore, as compared to the revised deficit of Rs 7.66 lakh crore for the last fiscal.
–IANS
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