RBI Report State’s Finances Improved for 2nd Consecutive Year; Combined GFD Stood at 2.8%

Current Context: The Reserve Bank of India (RBI) released a report titled “State Finances: A Study of Budgets of 2022-23” which provides an assessment of the finances of State governments for 2022-23.

• The report highlights that the fiscal health of the States has improved for the second consecutive year after the sharp pandemic-induced deterioration in 2020-21.
• This improvement is attributed to a broad-based economic recovery and high revenue collections.
• The States’ gross fiscal deficit (GFD) is budgeted to decline from 4.1% of the gross domestic product (GDP) in 2020-21 to 3.4% in 2022-23.
• However, the GFD was down to 2.8% of GDP in 2021-22.
• While States’ debt is budgeted to ease to 29.5% of GDP in 2022-23 as against 31.1% in 2020-21, it is still higher than the 20% recommended by the FRBM Review Committee, 2018.

Question:

Q.1 What is the budgeted States’ debt as a percentage of GDP in 2022-23?
a. 20%
b. 29.5%
c. 31.1%
d. 35%