States’ revenues are expected to grow by about 15% this year after a 3% drop in 2020-21, Crisil said on Tuesday, citing an estimated 20% rise in GST collections and about 25% jump in tax receipts on petroleum products.
However, States’ indebtedness levels would only improve marginally, from a decade-high 34% last fiscal to 33% this year, the rating agency reckoned, estimating that a 10-11% rise in revenue expenditure would negate the higher tax inflows.
Also, while States had budgeted for about 55% growth in capital outlays to about Rs. 5.6 lakh crore in 2021-2022, Crisil estimated actual growth would be about 20% ‘given the past track record’ and their already ‘well above’ historical levels of fiscal deficit of close to 4% of Gross States Domestic Product (GSDP).
“As the economy recovers... collections from GST and sales tax from petroleum products, comprising approximately 30% of States’ revenue is likely to rebound strongly,” said Ankit Hakhu, director at Crisil Ratings. However, a more intense third wave could impact estimates, Crisil noted.