Slow growth, infra spending in India to keep states' deficit high: Moody's

Rating agency Moody’s said on Wednesday that slowing growth and continued infrastructure spending needs would keep deficits at state-level elevated, further challenging India's fiscal consolidation efforts.

The government is facing growing challenges in meeting its medium-term fiscal consolidation goals amid a slowing economy, which has been driven by a combination of both cyclical and structural factors.

Indian sates, which do not generate sufficient own-source revenue for their spending needs and remain dependent on central government grants, have recorded larger deficits in recent years. The implementation of the goods and services tax (GST) further reduced states’ share of own-source revenues, the rating agency