Capex push in states

Maintaining the momentum will be challenging

State government finances have witnessed significant recovery after the pandemic-induced disruption. According to the latest annual study of state government finances by the Reserve Bank of India (RBI), the consolidated gross fiscal deficit of the states declined to 2.8 per cent of gross domestic product (GDP) in 2021-22 (provisional) from 4.1 per cent in 2020-21, the highest since 2004-05. This sharp consolidation was facilitated by higher tax collection as the economy recovered from the pandemic. For the ongoing fiscal year, in the aggregate, the states have budgeted for a fiscal deficit of 3.4 per cent of GDP, which is within