Web Exclusive | April 2018
UDAY obligations start to bite into states’ finances
The state governments in aggregate were expected to revert to well below 3 per cent fiscal deficit in financial year 2018, anal, analysts say they may not have. Nine of these states have revised their fiscal deficits for the just-concluded financial year to be higher than projected a year ago, with the slippage ranging from a marginal 0.1 percentage point to an odd 13.25 percentage points (pps). Six states project their deficits to be higher than the FRBM threshold of 3 per cent of GDP even in FY19, and many others might also incur deficits above 3 per cent in the year that has just begun. While a potential stress on spending, especially revenue expenditure, in the run-up to the 2019 general elections is a downside, an additional risk factor is the rising power sector costs on account of obligations under the scheme for revival of electricity distribution companies.