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State Finances in India: Managing Fiscal Risks and Sustaining Recovery

Author

Listed:
  • Chakraborty, Pinaki

    (National Institute of Public Finance and Policy)

  • Bhadra, Kausik K.

Abstract

In India, there have been significant post-pandemic fiscal corrections at both the Union and State levels. Our analysis shows that excessive fiscal corrections by some States coupled with the emergence of revenue deficits resulted in a situation of underutilisation of fiscal space and lower capital expenditure than its potential at the State level. However, many fiscal risks remain. Some of the major risks include increasing off-budget operations by the States. The study notes that future bailout of DISCOMs may significantly reduce fiscal space for development spending at the State level. The study concludes that Statespecific fiscal risks need appropriate policy considerations for sustainable fiscal recovery

Suggested Citation

  • Chakraborty, Pinaki & Bhadra, Kausik K., 2024. "State Finances in India: Managing Fiscal Risks and Sustaining Recovery," Working Papers 24/413, National Institute of Public Finance and Policy.
    • Handle: RePEc:npf:wpaper:24/413
    Note: Working Paper 413, 2024
    as

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    References listed on IDEAS

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    3. Campos, Camila F.S. & Jaimovich, Dany & Panizza, Ugo, 2006. "The unexplained part of public debt," Emerging Markets Review, Elsevier, vol. 7(3), pages 228-243, September.
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    5. Bhattacharya, Rudrani & C. Prasanth & Rao, R. Kavita, 2024. "How much Debt is Optimal for the Major Indian States? Economic Growth vs. Debt Sustainability," Working Papers 24/411, National Institute of Public Finance and Policy.
    Full references (including those not matched with items on IDEAS)

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