States’ gross fiscal deficit set to fall in 2022-23: RBI

States’ gross fiscal deficit set to fall in 2022-23: RBI- The finances of Indian states are expected to improve in 2022-23 with the consolidated gross fiscal deficit to gross domestic product ratio seen falling to 3.4% from 4.1% for the previous year, the Reserve Bank of India said on Monday.

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“The fiscal health of the states has improved from a sharp pandemic-induced deterioration in 2020-21 on the back of a broad-based economic recovery and resulting high revenue collections,” the central bank said in the State Finances Report that is released annually.

While states’ debt is budgeted to ease to 29.5% of GDP in 2022-23 as against 31.1% in 2020-21. But, it is higher than the 20% recommended by the Fiscal Responsibility and Budget Management Review Committee in 2018. The RBI has also advised governments to set up a fund for long-term expenditure when revenue collection is strong.