RBI State Finances Report

• The consolidated gross fiscal deficit of state governments was at 3% of GDP and a revenue deficit at 0.2% of GDP during 2022-23 and 2023-24.
• GFD was allocated at 3.2% of GDP in 2024-25.
• Capital expenditure went up from 2.4% of GDP in 2021-22 to 2.8% in 2023-24 and has been budgeted for 3.1% of GDP in 2024-25.
• State governments have maintained their aggregate gross fiscal deficit (GFD) at 3% of GDP for three consecutive years from 202122 to 202324, the Reserve Bank of India report has shown.
• The states also kept their revenue deficit at 0.2% of GDP in both 202223 and 2023- 24.
• In 202324, states kept their GFD at 2.9% of GDP that is within the FRLs limit of 3.5%.
• The sops such as free electricity and farm loan waiver, the report says may dilute the available resources crowding out the ability to build critical social and economic infrastructure.
• The report also shows that total outstanding liabilities of the states declined from 31.0% of GDP in 2021 to 28.5% in 2024 but remain above the prepandemic level of 25.3% (at endMarch 2019).
• States need to continue with fiscal consolidation while developmental and capital spending should take precedence.

RBI and it’s Monetary Policy

Comparing GVA and GDP