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MOSL: ECOSCOPE-States’ fiscal deficit at only 16.5% of BEs for 1QFY22; Combined spending grows only 9.4% YoY in 1QFY22

ECOSCOPE: States’ fiscal deficit at only 16.5% of BEs for 1QFY22; Combined spending grows only 9.4% YoY in 1QFY22

 

• Based on the monthly accounts available for 16 states (together accounting for ~76% of all states), total receipts of all states grew 29.7% YoY in 1QFY22, while total spending grew slowly at 18% YoY in 1QFY22. With this, states have achieved 16.8%/16.7% of their receipts/spending of FY22 budget estimates (BEs), better than 13.6%/15.4% of 1QFY21 BEs. States' fiscal deficit during 1QFY22 accounted for 16.5% of FY22 BEs, lower than 25% of 1QFY21 BEs, but higher than average 10.1% of BEs in the three years prior to the COVID-19 outbreak.
• States' total taxes grew 44.7% YoY in 1QFY22, supported by a favorable base (down 35.4% YoY in 1QFY21). States' own non-tax revenue receipts grew at a strong pace. However, 'grants from the Centre' declined by 3.6% YoY in 1QFY22 due to a massive growth (51% YoY) in 1QFY21. Within states' own taxes, the collection of stamp duty and registration charges more than doubled in 1QFY22, with all states showing sharp increases, except Odisha (OD).
• Just like receipts, states' spending too grew sharply in 1QFY22 due to a low base. Capital spending of states grew 143.1% YoY in 1QFY22 due to a 57% YoY contraction in 1QFY21. Revenue spending by states grew 10.8% YoY in 1QFY22 from a growth of 3.1% YoY in 1QFY21.
• Individual analysis of states suggests that six out of 16 states - CT, HR, KL, MP, RJ, and TS - had already achieved a quarter of their full-year fiscal deficit target in 1QFY22. In fact, KL has already exhausted 74% of its FY22 BE, while the fiscal deficit for the others was in the 23-31% range. Two states - Jharkhand (JH) and OD - have run fiscal surpluses in 1QFY22, and the fiscal deficit of remaining eight states was less than 15% of 1QFY22 BEs  (only 2% of BEs in MH).