Rising outstanding debt of states challenging, says Reserve Bank report

For 2019-20, states have budgeted a consolidated GFD of 2.6% of the GDP

Even as states have maintained their gross fiscal deficit (GFD) within the prescribed target of 3 per cent of gross domestic product (GDP) even for 2019-20, the outstanding debt of states have risen over the last five years to 25 per cent of GDP, posing medium term challenges to its sustainability, the state finance report released by the Reserve Bank of India (RBI).

For 2019-20, states have budgeted a consolidated GFD of 2.6 per cent of the GDP.

“Revenue generation holds the key to prudent debt management — improving tax buoyancy by capitalising on technology enabled efficiency gains under the GST architecture,