Ind-Ra expects states fiscal deficit to touch 3% of GDP in FY21

India Ratings and Research (Ind-Ra) expects aggregate fiscal deficit of the states to come close to 3 per cent of gross domestic product in the current fiscal year, higher than the budgeted 2.6 per cent.

In its note, it has revised the outlook on state finances to ‘stable-to-negative’ for the current fiscal year from ‘stable’.

Explaining the concept of ‘stable-to-negative’, Ind-Ra Chief Economist Devendra Pant said while bigger states are better placed to manage fiscal shocks, states which see fiscal deficit at 4 per cent or more may see deterioration.

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