State govts may run wider fis­cal deficit in FY17: HSBC

The Financial Express - - ECONOMY -

State gov­ern­ments are likely to run wider fis­cal deficit in the fi­nan­cial year 2016-17 be­cause of higher in­ter­est bill and wage hike pres­sures, an HSBC re­port said on Mon­day. Ac­cord­ing to the global fi­nan­cial ser­vices firm, de­spite higher trans­fers from the Cen­tre, an anal­y­sis of 18 state bud­get doc­u­ments sug­gests that the state gov­ern­ments on an ag­gre­gate clocked slightly wider deficits than bud­geted at the start of the year. “State gov­ern­ments are grap­pling with two new spend­ing pres­sures — the in­ter­est bill on UDAY bonds and pay com­mis­sion wage hikes,” HSBC said in a re­search note and added that ac­count­ing suf­fi­ciently for both sug­gests that state deficit could rise to 2.9% of GDP in FY17 from a re­vised 2.7% in FY16 (ag­gre­gate for 17 states).”

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