Why states should find newer resources rather than cut back on spending

For states staying within the fiscal deficit targets is important, but not by cutting back on expenditure

The latest report on state budgets, brought out by the Reserve Bank of India (RBI), has shown how most states have curtailed their expenditure to stay within the fiscal deficit limits set by them under the law. The combined fiscal deficit of all states and Union Territories with their own legislature was in 2019-20 contained within their budget target of 2.6 per cent of gross domestic product (GDP), even though their revised estimates had shown a significant slippage at 3.2 per cent. And they achieved this fiscal correction not by increasing revenue collections, but by sharply cutting back on both