States' gross fiscal deficit below Budget Estimate for a 2nd yr, The implementation of goods and services tax (GST) has led to increased tax buoyancy for the states

States have sustained improvement in their finances — which was achieved in the financial year 2021-22 — even during 2022-23 with a combined gross fiscal deficit (GFD) at 2.8 per cent of the gross domestic product (GDP). This is below the Budget Estimates for the second consecutive year, Reserve Bank of India’s (RBI’s) report on state finances said.

      The report titled, ‘State Finances: A Study of Budgets of 2023-24,’ said the reduction in deficit was achieved primarily through a reduction in the revenue deficit while sustaining robust capital outlays.

      “The implementation of goods and services tax (GST) has led to increased tax buoyancy for the states,” the report said.

      States’ total outstanding liabilities are budgeted to fall to 27.6 per cent of GDP for 2023-24 from the peak of 31 per cent in 2020-21.

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