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State Finances: A Study Of Budgets Of 2022-23

State Finances: A Study Of Budgets Of 2022-23

The Reserve Bank of India (RBI) has released a report stating that the Gross Fiscal Deficit (GFD) of states is expected to decrease to 3.4% of Gross Domestic Product (GDP) in 2022-23, from 4.1% in 2020-21.

  • This is due to a broad-based economic recovery and an increase in revenue collections.
  • The report titled “State Finances: A Study of Budgets of 2022-23” is a comprehensive analysis of the financial position of the Indian states, including the trends and challenges in their revenue and expenditure.

Finding of the Report:

  • According to the RBI report, states’ debt is expected to decrease to 29.5% of GDP in 2022-23, compared to 31.1% in 2020-21.
  • The report also highlights that this is still higher than the 20% recommended by the Fiscal Responsibility and Budget Management (FRBM) Review Committee in 2018.
  • States are anticipating an increase in non-tax revenue, which is generated from sources such as fees, fines, and royalties.
  • This increase is likely to be driven by revenue from industries and general services.
  • The report notes that states are expecting to see an increase in revenue from various sources such as State GST, excise taxes, and sales taxes in the 2022-2023 fiscal year.