Fiscal pressure on states to increase because of freebies; capex likely casualty: Emkay

Several states are showing signs of fiscal pressure because of the freebies and capital investment is likely to be the casualty, said Emkay Global in its states finance report.

- 

Highlighting the issue, the report said that states may try to rationalize their spending on these schemes but they will face pressure.

"Thus, while states may try to rationalize their spending on these schemes, the genie is now out of the bottle - we expect fiscal pressure on states to only increase from here on with capex (especially discretionary capex) likely to be the casualty," the report said.

The report says that the states are likely to spend less in the Financial Year (FY) 2025, to check the fiscal deficit-to-GDP ratio (by 20-30bps) than the budgeted 3.2 per cent.