Risk to state govt finances

Debt at the subnational level is high

Goods and services tax (GST) collection in September slipped to a 19-month low of Rs 91,916 crore. A lower GST collection along with slower growth in direct taxes and a reduction in corporation tax rates could affect the finances of not only the Union government but also of the state governments. States spend about one and a half times more than the Centre and account for about two-thirds of the general government capital expenditure. Therefore, the state of state government finances has a significant bearing on macroeconomic outcomes. In this context, the annual study of state finances by the Reserve