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Motilal Oswal Report
An analysis of 2023-24 budgets of 27 states/union territories confirms that states have budgeted a fiscal deficit of 3.1% of gross domestic product in FY24E versus 3.4% of GDP in FY23RE and 2.7% of GDP in FY22.
Gross market borrowings of all states are budgeted at Rs 9.9 trillion (3.3% of GDP) and net market borrowings are budgeted at Rs 7.3 trillion (2.4% of GDP) in FY24E. According to the Reserve Bank of India's data, actual state GMBs/NMBs stood at Rs 7.6 trillion/Rs 5.4 trillion (or 2.8%/2.0% of GDP) last year.
Outstanding debt of states is budgeted to grow 11.5% YoY, taking it to 28.3% of GDP in FY24E, slightly higher than 28.0% of GDP in FY23RE. States' debt was at a 15-year high of 31% of GDP in FY21, up from ~25% of GDP in the pre-Covid years.
Aggregate receipts of all states are budgeted to grow 10.9% YoY in FY24E, following 20%/25.4% growth in FY23RE/FY22. Interestingly, the entire growth is likely to be led by states' own receipts, as Center's support is expected to be stagnant in FY24. Total receipts, thus, budgeted to stay unchanged at an all-time high of 14.4% of GDP in FY24E.
Total spending of states is budgeted to grow 9.0% YoY in FY24E, following 24.1%/14.3% growth in FY23RE/ FY22. While revenue spending is budgeted to grow just 7.0% YoY, capital spending is budgeted to increase 18.9% YoY in FY24E. Total spending is budgeted to decline to 17.5% of GDP in FY24E (from the peak of 17.7% in FY23RE), though capital spending is budgeted to rise to a new peak of 3.2% of GDP.
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