Statsguru: States' finances are improving, debt likely to shoot up

When the Union government announced Budget for 2022-23, it had projected revenue to be 8.5% of GDP. A Business Standard analysis of latest report on state finances showed that states are catching up

Ishaan Gera New Delhi
Illustration: Ajay Mohanty

Illustration: Ajay Mohanty

When the Union government had announced the Budget for 2022-23, it had projected revenue to be 8.5 per cent of gross domestic product (GDP). A Business Standard analysis of the latest report on state finances released by the Reserve Bank of India last week showed that states were catching up. The revenue-to-GDP ratio projected by states was 8.2 — the highest in the past six years (chart 1). While states’ own revenue as a proportion of GDP is expected to rise, it is still low as a proportion of total revenue (the other part comes from central transfers). In 2022-23, the proportion of states’ own revenue compared to total revenue is expected to be 54.7 per cent, compared with 55.6 per cent in 2019-20 (chart 2). The silver lining is the improvement in states’ own revenue generation capacity. However, it is still not comparable to 2017-18, when the tax revenue ratio was 48.7 per cent. India introduced the goods and services tax in July 2017

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First Published: Jan 22 2023 | 5:42 PM IST

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