STATES' PUBLIC FINANCE TO IMPROVE

Despite the impact of the second Covid wave, states are now better placed in terms of public finances than earlier thought. India Ratings sees a better performance owing to expectations of higher gross domestic product at current prices and revenues in the current financial year.

The rating agency analysed 14 states — Uttar Pradesh, Uttarakhand, Telangana, Tamil Nadu, Odisha, Rajasthan, Punjab, Maharashtra, Madhya Pradesh, Kerala, Karnataka, Jharkhand, Haryana and Chhattisgarh. Of these, two states — Karnataka and Haryana — are projected to witness widening of their fiscal deficit in the current financial year compared to the previous financial year. Uttar Pradesh and Odisha are likely to have the same proportion of fiscal deficit as a percentage of GDP in the current financial year vis-a-vis FY21. The remaining states are seen to be improving on their public finance in FY22 compared to the previous year.