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Motilal Oswal Report
The tussle between the central government and states has come to the fore recently. When one looks at the states' finances in Q1 FY21, the bone of contention becomes clear as day.
Based on the monthly accounts available for 14 states (together accounting for approximately 63% of all states), the total receipts of the states declined 18.2% YoY in Q1 FY21, while total spending grew by just 2.7% YoY during the quarter.
Interestingly, while total spending stood at 18.4% of budget estimate, similar to that in previous years, the states' fiscal deficit was 36.5% of BE in Q1 FY21, more than double that in previous years.
Details related to the receipts suggest the states' total tax receipts (including centre's devolution) fell 32.1% YoY and non-tax revenue receipts fell 27% YoY in the first quarter of FY21.
Conversely, grants from the center grew by 56% during the quarter.
Within the states' own taxes, the collection of stamp duties and registration charges shrank 58% in Q1 FY21.
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