States do Centre a good turn

A sharp reduction in states' deficit augurs well for the Centre's fiscal planning

Until about 10 years ago, the Centre’s Budget size would be more than the combined expenditure of all the states. That changed in 2012-13. The states’ Budget size in 2012-13 rose to Rs 14.55 trillion, which for the first time was a little higher than that of the Centre’s at Rs 14.1 trillion.

Since then, the states’ share in total government expenditure in the country began rising steadily, and by 2019-20 it was as much as 55 per cent. The Covid pandemic led to a sharp rise in the Centre’s Budget size and changed that equation, but only for a