The fiscal deficit of India's top 10 states, ranked by GDP, may see a marginal decline amid an ambitious capex target, a study of their budgets showed.
The fiscal deficit of the top 10 states is budgeted to modestly ease to 3.2% of the GDP in FY24 after coming in at 3.3% of the GDP as per revised estimates, according to data collated by BQ Prime.
The states, ranked on the basis of their contribution to the national gross domestic product, are Maharashtra, Tamil Nadu, Karnataka, Uttar Pradesh, Gujarat, West Bengal, Andhra Pradesh, Rajasthan, Madhya Pradesh, and Telangana. Their fiscal deficit is budgeted to modestly widen from Rs 6.06 lakh crore in FY23 to Rs 6.55 lakh crore in FY24, as per revised estimates.
The union government is targeting a fiscal deficit of 5.9% for FY24, with the fiscal deficit settling at 6.4% in FY23—the same as the government had estimated in its last budget.
Rajasthan has the highest fiscal deficit at 4.3% of the GDP as per revised estimates for FY23, followed by Uttar Pradesh and West Bengal with 4% of the GDP. For FY24, while Uttar Pradesh is estimated to reduce its deficit to 3.5% of the GDP, Rajasthan and Madhya Pradesh see it at 4% of the GDP.
Ambitious Capex Target
A study of the top 10 state governments budgets showed that total expenditure increased 11% and capital expenditure surged 25.6%, compared to their revised estimates for FY23.
The union government's capital expenditure for FY24 is pegged at Rs 10 lakh crore, 33% higher than the last fiscal and forming about 3.3% of the GDP.
The combined revenue receipts and revenue expenditure of the top 15 states during April-January FY23 stood at 72% and 70% of their respective revised estimates, while capex was limited to 54% of the FY23 RE of Rs 6.1 lakh crore, according to an analysis by ICRA.
This suggests that the latter will be undershot by a considerable extent, which raises concerns about whether the ambitious capex target, included by some states in their FY24 budget estimates, can be achieved, ICRA stated in a note on the state government finances.
Andhra Pradesh has projected its capex to rise by 84.4% in FY24, compared to revised estimates for FY23, while Gujarat has projected a rise of 81%. West Bengal too has projected a sharp rise in capex of about 58%.
The FY24 budget estimates indicate a healthy improvement in the revenue account balance by a majority of the 15 states, Crisil said.
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