The Reserve Bank of India's (RBI's) latest study of state-government finances, released last week, showed significant progress at aggregate level. However, there is still ample scope for improvement and overall economic management depends, to a large extent, on how state-government finances are managed. At a broader level, since Union-government finances are typically the focus of public debate, reports like these help bridge an important gap.
The latest RBI study showed that the adoption of fiscal-responsibility rules had helped states. The consolidated gross fiscal deficit for states declined from an average of 4.3 per cent of gross domestic product (GDP) between 1998-99 and 2003-04 to an average of 2.7 per cent between 2004-05 and 2023-24. The debt stock also declined, though at 28.5 per cent of GDP (March 2024), it is still way above the 20 per cent mark as recommended by the Fiscal Responsibility and Budget Management Review Committee in 2017.
This story is from the December 25, 2024 edition of Business Standard.
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This story is from the December 25, 2024 edition of Business Standard.
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