A report titled “State Finances: A Study of Budgets of 2023-24”, released by the Reserve Bank of India (RBI) is an annual publication that provides information, analysis, and an assessment of the finances of State governments for 2023-24.
The report mentioned that the improvements by the state in their finances in the financial year 2021-2022, were sustained even in the current financial year 2022-2023. The State’s combined gross fiscal deficit (GFD) stood at 2.8 percent of the gross domestic product (GDP).
This figure is below the budget estimate for the second consecutive year. The States anticipate prudent fiscal management for 2023-24, with the consolidated GFD budgeted at 3.1 percent of GDP.
“The implementation of goods and services tax (GST) has led to increased tax buoyancy for the states,” the report said.
The state’s total outstanding liabilities are budgeted to be at 27.6 percent of GDP for 2023-24, from 31 percent in 2020-21.
The growth of revenue expenditure slowed to 8.9 percent, thus creating room for higher capital outlay. The capital outlay surged during the first half of the current financial year by 52.6 percent. It was supported by the Centre’s scheme and assistance to the states for capital investment.
While the overall tax efforts of the States are strong, further improvement in tax revenues will require them to strengthen their tax capacity, including through tax reforms and effective and innovative tax administration.
Written by Nalin Suriya S
