Declining Deficit: Faster growth to give greater fiscal leg-room to states

New Delhi, Feb 26 Economic growth as well as higher revenue receipts are expected to give state governments greater leg-room in FY23.

Besides, it is estimated that despite Covid-19 and populist schemes the outlook on the finances of Indian states is set to improve in FY23.

Notably, greater financial assistance provided by the Centre is expected to tide over any revenue shortfall during the ongoing pandemic phase.

In FY23 budget, the Centre has allocated Rs 1 trillion worth of financial assistance by way of the 50-year interest-free loans.

Further, the Centre has allocated a higher amount of Rs 7.45 trillion as the states share in central taxes in FY22RE.

However, the situation remains acute with Omicron wave slowing down growth momentum.

As per a Reserve Bank of India's study of budgets, the total liabilities of all state governments increased by 14.6 per cent to Rs 60.2 trillion in FY2021 revised estimates

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