Home / Knowledge / News / Textiles / Moderate revenue growth to put pressure on states: Ind-Ra

Moderate revenue growth to put pressure on states: Ind-Ra

03
Feb '20
Pic: Shutterstock
Pic: Shutterstock
India Ratings and Research (Ind-Ra) has revised its outlook on state finances to stable-to-negative for fiscal 2020-21 from stable. It expects states’ aggregate fiscal deficit to come in close to 3 per cent of gross domestic product (GDP) in the fiscal, higher than the budgeted 2.6 per cent of GDP for 2019-20. It expects low GDP growth to continue in 2020-21.

State government finances are likely to continue witnessing revenue pressure in 2020-21, it said in a recent press release.

The rating agency expects states’ aggregate tax revenue (including devolutions from the central government) and revenue receipts to grow 11.0 per cent and 9.9 per cent respectively, in 2020-21.

The 15th Finance Commission has submitted its report for 2020-21. The term of 15th Finance Commission is extended to 30 October 2020 from 30 November 2019. The commission in its final report (to be submitted by 30 October 2020) will make recommendations on revenue sharing between central and state governments for the period from 2021-22 to 2025-26. Ind-Ra, therefore, has assumed states’ share in devolution to remain at 42 per cent in 2020-21.

It expects states’ revenue account on aggregate to clock a deficit of 0.4 per cent of GDP in 2020-21 compared with a surplus of 0.01 per cent budgeted for 2019-20. A higher revenue expenditure than revenue receipts would, primarily, be led by the outgo related to interest payments in 2020-21 on account of higher borrowings in 2019-20.

Due to the economic slowdown, even the union government finances are under pressure, leading to delays in payment of Goods and Services Tax compensation to states. Ind-Ra believes if the delay continues, then it would adversely impact states’ risk profile.

The agency expects the states’ aggregate debt/GDP to rise to 27.5 per cent in FY21 from the budgeted 24.7 per cent for 2019-20. States’ aggregate debt burden would increase as states resort to fund the fiscal deficit by way of higher market borrowings.

Ind-Ra estimates the gross market borrowings of states to increase to ₹6.09 trillion in FY21 from its estimated ₹5.96 trillion for 2019-20.

The burden of fiscal adjustment mostly falls on capital expenditure during the periods of subdued economic growth. Ind-Ra believes with capital expenditure bearing the brunt of the economic slowdown and lower growth in revenue receipts in 2019-20, the situation is unlikely to change significantly in the next fiscal.

Ind-Ra expects states’ aggregate capex/GDP to come in marginally lower at 2.8 per cent in 2020-21 from the budget estimate of 3 per cent for 2019-20, as states attempt to control fiscal deficit through a curtailment in capital expenditure.

Fibre2Fashion News Desk (DS)


Must ReadView All

Pic: Shutterstock

Textiles | On 23rd Sep 2021

Global economic recovery continues but remains uneven: OECD

The global economy is growing far more strongly than anticipated a...

Pic: Shutterstock

Textiles | On 23rd Sep 2021

President Biden plays down probability of US-UK trade deal

US President Joe Biden has played down the chances of a post-Brexit...

Pic: Shutterstock

Textiles | On 23rd Sep 2021

ADB revises down Cambodia’s growth forecast, sees rebound in 2022

Cambodia’s economy is projected to grow by 1.9 per cent this year...

Interviews View All

Textile Industry, Head honchos

Textile Industry
Head honchos

Marry craft and utility

Textile Industry, Head honchos

Textile Industry
Head honchos

Consistency is the first rule of social media

Gaurav Davda, Jindal Worldwide Ltd

Gaurav Davda
Jindal Worldwide Ltd

Indian MMF sector to become globally competitive

Kurt Wedgwood,

Kurt Wedgwood

From design to raw material to fabrication and ultimately to delivery -...

Yawer Ali Shah,

Yawer Ali Shah

Synthetic colours and dyes were all the rage till the very first ban on...

Kishina Daruka and Mishika Daruka,

Kishina Daruka and Mishika Daruka

Headquartered in Kolkata, India, sustainable clothing brand Ora was...

Tiasha Renganathan, Twinery Innovations by MAS

Tiasha Renganathan
Twinery Innovations by MAS

Twinery-Innovations by MAS is the innovation arm of Sri Lankan company MAS ...

 Natacha Defeche, Edana

Natacha Defeche
Edana

Since 1971, EDANA, the International association serving the nonwovens and ...

Shujaul Rehman, Garware Technical Fibres

Shujaul Rehman
Garware Technical Fibres

Garware Technical Fibres Ltd (formerly Garware-Wall Ropes Ltd) is a...

Sarah Denise Cordery, Sarah Denise Studio

Sarah Denise Cordery
Sarah Denise Studio

Manchester, England-based Sarah Denise Studio provides relevant fashion...

Seema Gujral, Label Seema Gujral

Seema Gujral
Label Seema Gujral

<b>Seema Gujral</b>'s designs for her eponymous label revolve around...

Raghavendra Rathore, Label Raghavendra Rathore Jodhpur

Raghavendra Rathore
Label Raghavendra Rathore Jodhpur

Being one of the first designers to use the "Brand India" positioning for...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


editorial@fibre2fashion.com

Letter To Editor






(Max. 8000 char.)

Search Companies





SEARCH

Leave your Comments


September 2021

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.


Advanced Search