How Fast Can States Grow Their Spending Post Covid-19? Motilal Oswal Report
A man counts Indian rupee banknotes in Varanasi, Uttar Pradesh, India. (Photographer Dhiraj Singh/Bloomberg)

How Fast Can States Grow Their Spending Post Covid-19? Motilal Oswal Report

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Motilal Oswal Report

In Part I of decoding the Budget, we explained that average growth in capital expenditure in FY21 and FY22 is estimated at 9.5%, much lower than the ~28% suggested in the Budget, but similar to pre-Covid-19 years.

In Part II, we argued that the revised fiscal deficit target – to pare it down to 4.5% of gross domestic product – is not really expansionary and actually suggest average growth of ~6% in total spending between FY23 and FY26, lower than the 8.6% in pre-Covid-19 years.

In this final part of this series, we discuss the likely growth in states’ spending in FY22 and beyond, considering the revised fiscal deficit targets for them.

One of the striking features of the Union Budget 2021-22 was the transfer of resources from the center to states.

Click on the attachment to read the full report:

Motilal Oswal Ecoscope State Spending.pdf

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