The aggregate gross fiscal deficit of states may decelerate to Rs 4,86,500 crore in 2018-19 from Rs 5,14,320 crore in 2017-18. This will mark an improvement in the fiscal health of states for a second year.

 

According to the fourth edition of the RBI’s Handbook of Statistics on Indian States — 2018-19,  States’ gross fiscal deficit had gone up for seven straight years from 2010-11.

 

Bihar and Assam may record the biggest decline in their fiscal deficit numbers. While Bihar’s deficit is expected to fall from Rs 34,960 crore (Revised Estimate for 2017-18) to Rs11,200 crore (Budget Estimate for 2018-19), Assam’s numbers are set to improve from Rs36,600 crore to Rs9,770 crore.

 

Andhra Pradesh and Punjab are also among the States whose fiscal deficit is projected to decline.

 

Madhya Pradesh and Maharashtra, where the farm-loan waiver has become a drag on the State governments’ finances, are expected to see an increase in their fiscal deficit.

 

On another positive note, the States are expected to close 2018-19 with net receipts exceeding projections.

 

A revenue deficit arises when the government’s actual net receipts are lower than the projected receipts.

 

According to the RBI, all States are expected to see a revenue deficit of –(minus) Rs2,920 crore in 2018-19, compared to a shortfall of Rs61,080 crore in 2017-18, thanks to net receipts being higher than projected receipts.

 

Such an increase was last reported in 2012-13.