State debt dynamics

Strict fiscal rules needed to reverse fiscal disparities

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The Union Budget draws significant attention, but state finances are equally important. A new working paper from the National Council of Applied Economic Research examines Indian states' public debt and risks. States hold a third of India's public debt, account for about two-thirds of general government expenditure, and a third of revenue collection.

The paper rightly raises concern about fiscal discipline and divergence in debt burdens among states. Understanding these dynamics is crucial for policymakers to tailor interventions.