States’ fiscal deficit rises to 3.2% in FY25: Icra

THE COMBINED FISCAL deficit of 19 large states, excluding northeast states and Goa, has increased to 3.2% of gross state domestic product (GSDP) in FY25 provisional actuals (PA) from 2.8% in FY22 due to dual pressures of higher revenue deficits and elevated capital spending, a report by ICRA on state government finances revealed.

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Despite an increase in welfare spending, these states' combined revenue deficit edged up only mildly to 0.7% of GSDP in FY25 PA, from 0.5% in FY22.On a positive note, capital expenditure showed strong momen