scorecardresearch
States' fiscal balances remain weaker than pre-COVID levels in Q1 FY22: ICRA

States' fiscal balances remain weaker than pre-COVID levels in Q1 FY22: ICRA

Aditi Nayar, Chief Economist, ICRA Ltd., noted that the fiscal data for 19 state governments for Q1 FY2022 reveals that their combined revenue receipts in that quarter were only 2.0% higher than the pre-COVID level of Rs. 4.3 lakh crore

ICRA noted that the state own tax revenues (SOTR) in Q1 FY2022 trailed pre-pandemic levels by around 3% ICRA noted that the state own tax revenues (SOTR) in Q1 FY2022 trailed pre-pandemic levels by around 3%

Given the varied recovery in revenues and expenditures of 19 state governments in Q1 FY2022, their combined fiscal balances have reported a deterioration relative to pre-COVID levels, ratings agency ICRA said on Thursday.

Aditi Nayar, Chief Economist, ICRA Ltd, noted the fiscal data reported by the Comptroller and Auditor General (CAG) for 19 state governments for Q1 FY2022 reveals that their combined revenue receipts in that quarter were only 2.0% higher than the pre-COVID level of Rs. 4.3 lakh crore. "The recovery in receipts was led by non-tax revenues, even as own taxes and Central tax devolution trailed the level witnessed in Q1 FY2020," said Nayar.

Also Read: April-July fiscal deficit at 21.3% of Rs 15.07 lakh cr FY22 target

She said the revenue spending of 19 states simultaneously rose by a sharper 14% to Rs 4.9 lakh crore, "possibly reflecting higher social sector spending amid the second wave of COVID-19."

"Given the permission to continue construction activities with some restrictions, the capital spending by the 19 state governments recovered to Rs 0.6 trillion in Q1 FY2022, exceeding the pre-pandemic level of Q1 FY2020 by a heartening, albeit mild 2.6%," said Nayar.

She said accordingly, the 19 states' combined revenue balance slipped into a deficit of Rs 0.5 lakh crore in Q1 FY2022, in contrast to the small surplus of Rs 0.1 lakh crore in Q1 FY2020. Moreover, their fiscal deficit has nearly doubled to Rs 1.1 lakh crore in Q1 FY2022 from the pre-COVID level of Rs 0.6 lakh crore in Q1 FY2020."

ICRA noted the states' own tax revenues (SOTR) in Q1 FY2022 trailed pre-pandemic levels by around 3% on account of stamps and registrations (S&R), and excise duty collections, even as sales tax and state goods and services tax (SGST) exceeded their pre-COVID levels.

Also Read: India records Q1 FY22 GDP growth at 20.1% on low base, improved manufacturing

Published on: Sep 02, 2021, 6:51 PM IST
Posted by: Manali, Sep 02, 2021, 6:26 PM IST