Based on the monthly accounts of 18 states (accounting for ~87% of all states), total receipts of all states surged 21.4% YoY in 2QFY22, leading to growth of 24.8% YoY in 1HFY22 and spending grew relatively slower by 16.8% YoY last quarter, implying growth of 16.2% YoY in 1HFY22, stated Motilal Oswal Institutional Equities.
Consequently, on an aggregate level, states' fiscal deficit stood at 40.2% of BE in 1HFY22 - this was lower than 55.6% of BE in 1HFY21. Combining the finances of states with those of the central government, the total receipts by the general government (GG) grew 29.4% YoY in 2QFY22 and spending grew 20% YoY in 2QFY22, after declining 11% YoY in 2QFY21, it said.
While capex grew 52% YoY in 1HFY22 on a low base, it was just one-third of FY22BE in 1HFY22. Therefore, fiscal deficit of the GG was just 36.8% of 1HFY22 BEs vis-à-vis an all-time high of 89% in 1HFY21. Assuming 16% YoY growth in nominal GDP in 2FY22, the fiscal deficit stands at 8% of GDP in 1HFY22, lower than 15% of GDP in 1HFY21, the broking firm added.
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