MUMBAI: The Budget has listened to a long standing demand of the states, especially those already highly indebted ones, to increase their borrowing limits from the presently capped 3 per cent of their GSDP, by increasing it by 50 bps to 3.5 per cent from next fiscal.
Under the Fiscal Responsibility and Budget Management Act, the fiscal deficit of states cannot overshoot 3 per cent of their GSPD.
However, the states' fiscal deficit is likely to overshoot by 20 bps this fiscal to 3.2 per cent or around Rs 11 trillion of market borrowing in FY25. This is also higher than the 3 per cent recommended by the 15th Finance Commission.
The most indebted states include Arunachal Pradesh (6.7 per cent fiscal deficit), Sikkim (5.2 per cent), Himachal Pradesh (4.7 per cent), Tripura (4.5 per cent) and Punjab and Kerala have it around 4 per cent.
According to current estimates, the combined fiscal deficit of Indian states for FY25 is projected at 3.2 per cent of GSDP, which is slightly Key points about the state combined fiscal deficit in FY25.