States' capital expenditure cut to cause GDP fall, estimates ICRA

While ICRA estimates an 11 per cent contraction in the overall GDP in FY21, it expects the contraction to narrow to 5-7 per cent in the Q3 and 1-2 per cent in Q4

The aggregate debt of 12 major states is estimated to worsen significantly, and their capital spending might decline sharply because of lower-than-expected goods and services tax (GST) revenue and shortfall in Centre’s devolution, rating agency ICRA said on Wednesday. This could lead to a 1-2 per cent contraction in Q4FY21.

The 12 states sampled by ICRA were Andhra Pradesh, Gujarat, Haryana, Karnataka, Kerala, Maharashtra, Punjab, Rajasthan, Tamil Nadu, Telangana, Uttar Pradesh, and West Bengal. The combined gross state domestic product (GSDP) of these states accounted for three-fourths of the national GDP in 2018-19. The aggregate debt of these states is estimated