India Ratings and Research (Ind-Ra) expected the aggregate fiscal deficit of states to rise to 4.5 per cent of GDP in 2020-21, as against its earlier forecast of 3 per cent. Ind-Ra said the state governments were already faced with a lower-than-budgeted share in central taxes and subdued own revenue growth, when the lockdown was imposed on March 25 in India.

The 20 states considered in the analysis constituted nearly 86 per cent of the budgeted aggregate revenue receipts for FY20. The aggregate revenue receipts of these states came in lower by 4.2 per cent than budgeted at Rs 24.79 trillion in FY20(RE), led by a 16.2 per cent cut in the devolution of central taxes against BE.