States' deficit, market borrowings to increase to 4.5% of GDP: Ind-Ra

State governments were already faced with a lower-than-budgeted share in central taxes and subdued own revenue growth, when the 21 days economic lockdown was imposed from March 25

India Ratings and Research (Ind-Ra) expects the aggregate fiscal deficit of states to now rise to 4.5 per cent of gross domestic product (GDP) in FY21 as against the agency's earlier forecast of 3 per cent.

Like many countries across the globe, India has been hit by Covid-19 pandemic. It has come at a time when the country was already facing a broad-based economic slowdown with revenues of both the central and state governments under pressure.

Ind-Ra said it evaluated the revised estimates for FY20 and FY21 budget estimates of 20 states. Since these states presented their budgets before the Covid-19 induced