RBI deputy governor B P Kanungo slams states for fiscal indiscipline

Growth in the states' aggregate expenditure has outpaced that of the central government for each of the years since 2011-12

Reserve Bank of India (RBI) Deputy Governor B P Kanungo on Friday warned of fiscal profligacy in states and said signs of fiscal imbalance in states were a “matter of concern”. Kanungo said over the past decade the size of state government budgets had increased sharply “and they now collectively spend substantially more than the Union government”.

The gross fiscal deficit to gross domestic product (GFD-GDP) ratio in 2017-18, which is above 3.1 per cent, is above the Fiscal Responsibility and Budget Management (FRBM) threshold for the third consecutive year, Kanungo said in his keynote address at the financial market conclave