19 states’ Q1 fiscal balance weaker than pre-Covid levels: ICRA

Fiscal balances of 19 states in the quarter ended June FY22 are weaker than pre-Covid levels with milder recovery in revenue and spending, said ratings agency ICRA.

Citing data from the Comptroller and Auditor General (CAG), the combined revenue receipts were only 2% higher than the pre-Covid level of Rs 4.3 lakh crore but revenue spending increased by a sharper 14% to Rs 4.9 lakh crore from Rs 4.3 lakh crore pre-Covid, possibly reflecting higher social sector spending amid the second wave of Covid-19, the agency said.

“Accordingly, the 19 states’ combined revenue balance has slipped into a deficit of Rs 0.5 lakh crore in Q1 FY2022, in contrast to the small surplus of Rs 0.1 lakh crore in Q1 FY2020," said Aditi Nayar, chief economist at ICRA.