Budget 2019: Sweet Spot For States
The fiscal deficit of states is lower than estimated, while their share in central taxes and GST compensation has increased.
Although every minute detail of the Union Budget is deciphered by the markets, state budgets do not receive their due share of attention. At the beginning of 21st century, states' spending was similar to that of the central government. But this has increased tremendously over the past few years, as states now receive a larger share of central taxes and are guaranteed by the Centre for any GST shortfall. Consequently, states' spending was about 135 per cent of the Union Budget in 2018/19, and their net market borrowings are budgeted to be higher than those of the Centre for the first time ever in 2019/20. A combined analysis of the states and the Centre, thus, is
