States' fiscal health better after Covid-19 pandemic stress: RBI report

States must urgently push for debt consolidation, create capex buffers

The fiscal health of state governments has shown improvement after a sharp deterioration induced by the pandemic in 2020-21, the Reserve Bank of India (RBI) said in a report on state finances released on Monday.

The better showing on states’ fiscal front has been driven by a broad-based economic recovery and the resultant improvement in revenue collections, the RBI said in the report, which was prepared by the central bank’s Division of State Finances of the Department of Economic and Policy Research.

“States’ gross fiscal deficit (GFD) is budgeted to decline from 4.1 per cent of gross domestic product (GDP)