Flatter to deceive

After a few good years, states slip on the fisc

The one unequivocal success of the Narendra Modi-led government is an improvement in the Centre’s fiscal state. But these gains have largely been lost because of a reverse trend at the state level. After contracting for a few years, state-level fiscal deficits have done a u-turn: They have ballooned even as expenditure has soared. An HSBC Research analysis of the Budgets of 16 states that account for almost 85 per cent of the economy shows that, in aggregate, they sustained a higher fiscal deficit in 2016-17 at 2.8 per cent of GDP (revised estimates) compared to the budgeted estimate of