State Finances in India: Managing Fiscal Risks and Sustaining Recovery

Pinaki Chakraborty (pinaki.chakraborty@nipfp.org.in) and Kausik K. Bhadra (eco.kaushik@gmail.com)
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Pinaki Chakraborty: National Institute of Public Finance and Policy

Working Papers from National Institute of Public Finance and Policy

Abstract: In India, there have been significant post-pandemic fiscal corrections at both the Union and State levels. Our analysis shows that excessive fiscal corrections by some States coupled with the emergence of revenue deficits resulted in a situation of underutilisation of fiscal space and lower capital expenditure than its potential at the State level. However, many fiscal risks remain. Some of the major risks include increasing off-budget operations by the States. The study notes that future bailout of DISCOMs may significantly reduce fiscal space for development spending at the State level. The study concludes that Statespecific fiscal risks need appropriate policy considerations for sustainable fiscal recovery

Pages: 19
Date: 2024-06
Note: Working Paper 413, 2024
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