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States' revenue collection was resilient to disruptions from the second Covid wave.

Mumbai (Maharashtra) [India], August 30 (ANI): India Ratings and Research (Ind-Ra) expects aggregate fiscal deficit of states to moderate to 4.1 per cent of the gross domestic product (GDP).

The agency’s earlier forecast for FY22 was 4.3 per cent. The impact of second Covid wave on the economy notwithstanding, Ind-Ra estimates nominal GDP to grow 15.6 per cent in FY22, higher than its February estimate of 14.5 per cent in FY22.

The revenue receipts of state governments are expected to improve, backed by an economic recovery, resulting from a large section of the populace receiving vaccinations.

This will lead to states further easing restrictions on business and commercial activity. The agency now expects the aggregate revenue deficit of states to come in marginally lower at 1.3 per cent of GDP in FY22 than the earlier forecast of 1.5 per cent of GDP.

Ind-Ra analysed information on 14 states for 1Q FY22. The aggregate revenue receipts of these 14 states grew 30.8 per cent to Rs 3.95 lakh crore during April to June FY22.

Although the considerable improvement is due to a low base, revenue receipts grew 1.5 per cent in 1Q FY22 over the pre-Covid 19 period of 1Q FY20.

The aggregate own tax and non-tax revenue receipt of 14 states grew 77 per cent year-on-year and 46 per cent respectively in 1Q FY22 which indicates these states’ revenue collection was resilient to disruptions from the second Covid wave.

In line with the slight moderation in fiscal deficit in FY22 (forecast), Ind-Ra expects the aggregate debt/GDP ratio to come in lower at 32.4 per cent in FY22. All states’ gross market borrowings were Rs 7.88 lakh crore in FY21.

During April to July 2021, states’ aggregate market borrowing was lower at Rs 1.94 lakh crore than Rs 2.1 lakh crore in April to July 2020.

This is primarily attributable to an improvement in states’ aggregate revenue receipts during 1Q FY22.

Ind-Ra estimates the gross market borrowings of states in aggregate will increase to Rs 8.2 lakh crore in FY22. The net market borrowings will be Rs 6.2 lakh crore in FY22. (ANI)

This story is auto-generated from a syndicated feed. ThePrint holds no responsibility for its content.

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