Fiscal ratios of 19 large states could be collectively better than FY23BE: India Ratings | The Financial Express

Fiscal ratios of 19 large states could be collectively better than FY23BE: India Ratings

Aided by the ongoing economic recovery/normalisation of economic activities, the rating agency expects the state government finances to do well even in H2FY23.

Fiscal ratios of 19 large states could be collectively better than FY23BE: India Ratings
A glance at the deficit number showed that the market borrowings by states during H1FY23 is not commensurate with their fiscal deficit. (IE)

The aggregate financials of 19 large states showed significant improvement during the first half of the current financial year compared to year-ago period, India Ratings said on Tuesday.

Aided by the ongoing economic recovery/normalisation of economic activities, the rating agency expects the state government finances to do well even in H2FY23.

“Meeting the FY23 revenue and fiscal deficit target of 0.54% and 3.37% of GSDP, respectively, of 19 states combined will not be difficult,” India Ratings said.

However, the same cannot be said about individual states, as some states such as Andhra Pradesh, Bihar, Himachal Pradesh, and Punjab have built up significantly high revenue and/or fiscal deficit in H1FY23, it said.

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However, a glance at the deficit number showed that the market borrowings by states during H1FY23 is not commensurate with their fiscal deficit.

While the fiscal deficit of 19 states collectively stood at Rs 2.34 trillion in H1FY23, the market borrowings were Rs 2.61 trillion. “Such an anomaly arises because the market borrowings of the states are not done as per the ongoing requirement but as per the advanced borrowing calendar released by the Reserve Bank of India. The surplus money of the states is parked in the intermediate/auctioned treasury bills,” it said.

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First published on: 30-11-2022 at 02:45 IST