Fiscal health of Indian state govts to worsen due to Covid-19: S&P

This is despite a likely rebound in the economy over the next 12-24 months, says rating agency

The Covid-19 pandemic could worsen structural deficits and indebtedness of state governments in India. This is despite a likely rebound in the economy over the next 12-24 months, according to rating agency Standard and Poor's (S&P).

The rating agency in a statement said, “It will be hard for state governments to rapidly scale down elevated expenditures induced by Covid-19. The pandemic has led to increased spending on healthcare, social safety, and digital infrastructure. We therefore project balance after capital accounts deficit to average 30 per cent of revenues over 2019-2023."

The pandemic has further pushed out states' consolidation targets under Fiscal Responsibility