According to the report, twelve out of seventeen states saw faster growth in fiscal 2018 compared with the previous 5 years. This is despite the fact that all-India GDP growth was lower in fiscal 2018 compared with the previous 5 years.
Bihar has secured the top position among 17 non-special states in terms of GSDP growth in fiscal 2018, followed by Andhra Pradesh and Gujarat, according to a recent report by a rating agency. Jharkhand, Kerala and Punjab are placed at the bottom in terms of growth, CRISIL report named ‘States of growth 2.0’ also said.
In terms of growth, inflation, and fiscal deficit, it has placed Gujarat and Karnataka on the top three performing states in fiscal 2018. “West Bengal gained a foothold into the top three with an all-round turnaround – GSDP grew 9.1% on-year in fiscal 2018 compared with 4.8% earlier, even as inflation dropped sharply to sub-4% from
7%; and fiscal deficit to 2.4% from 3%”, the report added.
According to the report, twelve out of seventeen states saw faster growth in fiscal 2018 compared with the previous 5 years. This is despite the fact that all-India GDP growth was lower in fiscal 2018 compared with the previous 5 years. However, this growth hasn’t been equitable as the low-income states have not sustained high growth long enough to meaningfully bridge the per capita income gap with the high-income states, said the report.
Moreover, it has also noted that this growth has not translated into job creation as the expansion came from the sectors with low employment elasticity. This could also be backed by a report by Centre for Monitoring Indian Economy, a think tank, according to which 1.1 crore jobs were lost in India during 2018.
The report also pointed that while the FRBM Act had helped states recover their fiscal health considerably, recent trends show they are slipping. Debt ratios (debt/GDP) have risen in many states – with the assimilation of Ujwal Discom Assurance Yojana (UDAY), farm loan waivers, and Pay Commission hikes.
According to it, Punjab, Rajasthan and Kerala had debt ratios of over 30%, while Chhattisgarh, Maharashtra and Karnataka had kept it relatively low. Further, most states witnessed an increase in the primary deficit which it regarded as the major cause for rise in the debt ratio.
Finally, the report concluded by suggesting that the states should to focus on improving their primary deficit by shoring up its tax revenue, especially in the backdrop of increased devolutions from the centre.