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States' rising debt amid pandemic a risk to their finances, says RBI

The maturity profile of states' debt suggest that redemption pressure is likely to double from 2026 onwards

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The virus is “likely to undermine fiscal targets and associated receipts for 2020-21,” the central bank said

3 min read Last Updated : Oct 27 2020 | 5:58 PM IST

Indian states are racking up more debt to fund the prospect of wider budget deficits as they step up spending to fight the virus pandemic, the central bank said.

“States have been at the forefront in the fight against the pandemic and the public health crisis it has spawned, besides the biggest migration in the world,” the Reserve Bank of India said in a report -- Study of State Finances -- published Tuesday. “The debilitating combination of compression in tax receipts and ramped-up expenditures has generated unprecedented pressures on fiscal positions at sub-national levels.”

India’s federal government revised its borrowing plan for

Topics : Coronavirus state debt RBI

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