Statsguru: Rough terrain for states amid slowing economy hit by Covid-19

The recently released Reserve Bank of India (RBI) report on the financial situation of Indian states underlined the massive challenges that lie in their path. The pandemic has significantly increased difficulties for state governments.

In FY20, provisional accounts indicate that states’ revenue receipts were 12 per cent lower than the Budgeted amount, shows chart 1. 

The year was only marginally impacted by the pandemic, but the economy was slowing down. However, states audaciously budgeted for a 20 per cent revenue growth in the current year.

At the same time, states are relying more on guarantees to public sector enterprises they