Thirteen states have reported an average 25 percent decline in their fiscal deficit in the 12 months of FY18, according to a report. The report said this was primarily due to contraction in capital outlay. The revenue of these governments, however, has gone up by 7.5 percent in the fiscal year to March 2018. Credit rating agency Icra report said in FY17 these states revenue had gone up 11.5 percent. The report was based on the provisional fiscal data given by the CAG.

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Fiscal deficit of these 13 states fell to Rs 3.2 trillion in FY18 from Rs 4.3 trillion in FY17, partly on account of the contraction in capital spending. Icra report said,"While the CAG data shows that these 13 states have seen a steep 25 percent decline in their fiscal deficit in FY18, their aggregate revenue receipts rose 7.5 percent, which is sharply lower from 11.5 percent a year ago." 

The slowdown in revenue growth was due to contraction in the non-tax revenue. The non-tax revenue comprises grants from the Centre and states' own non-tax revenues, and a mild slowdown in the pace of growth of tax revenue, comprising Central tax devolution and states' own-tax revenues, the report said.

However, the pace of aggregate tax revenue growth of the of 13 states improved to 10.1 percent in FY18 from 7.7 percent in FY17, it said. The CAG data are provisional and unaudited.​ Growth of aggregate revenue expenditure of these states eased to 8.8 percent from 13.1 percent in FY2017. The capital outlay contracted by 9.4 percent in FY18 in contrast to the healthy growth of 17.1 percent in FY17.

The report stated, "The contraction in capital outlay can be due to a combination of factors, including the lack of fiscal space led by the slowing growth of revenue receipts, re-prioritisation of spending after the farm loan waiver announcement by some leading states, base effect related to the Uday scheme (of the power sector) and the delay in presentation of budgets by a few states in FY18 due to the assembly elections".

Even as fiscal deficit of these states fell by 25.1 percent to Rs 3.2 trillion from Rs 4.3 trillion in FY17, the report indicates 46.7 percent widening of revenue deficit to Rs 72,360 crore in FY18 from Rs 49,340 crore in FY17 due to contraction in capital spending.