RBI releases state finances: a study of budgets of 2022-23 report.

January 18, 2023

It is an annual publication that provides information, analysis and an assessment of finances of State governments for 2022-23.
Theme of this year’s Report is “Capital Formation in India -The Role of States’
Key findings of report
- State’s Gross fiscal deficit (GFD) is budgeted to decline to 3.4 percent of GDP in 2022-23 from 4.1 percent in 2020-21.
- GFD is excess of total expenditure including loans net of recovery over revenue receipts (including external grants) and non-debt capital receipts.
- States’ debt is budgeted to ease to 29.5 percent of GDP in 2022-23 as against 31.1 percent in 2020-21.
- In 2022-23, states have budgeted higher capital outlay than in previous three years.
Recommendations
- Increase allocations of capital expenditure for sectors like health, education etc.
- Create a capex buffer fund during good times to smoothen and maintain expenditure quality and flows through economic cycle.
- Strengthen timely devolution mechanism to local bodies through State Finance Commissions.
- Encourage and facilitate higher inter-state trade and businesses.