Many states under heavy financial pressure due to schemes with free facilities [Read SBI Ecowrap Report]

Many states under heavy financial pressure due to schemes with free facilities [Read SBI Ecowrap Report]

The proverb of income rising, spending rupees has now started fitting perfectly in many states. Especially when schemes for providing free gifts and free facilities for political gains have started increasing. This has been disclosed in the report of SBI Ecowrap. It has been said in the report that many states are making announcements of loan waiver, old pension scheme and many other free schemes, which are not financially viable for the states and may worsen their financial condition. These states should spend wisely and logically because these states are spending more than their revenue receipt in running the free scheme.

Which states spend how much on free schemes?

The Ecowrap report, for example, states that Telangana spends 35 per cent of its revenue on freebies and populist schemes. States like Rajasthan, Chhattisgarh, Andhra Pradesh, Bihar, Jharkhand, West Bengal, Kerala spend 5-19 percent of their revenue on free schemes. Chhattisgarh has recently announced to implement the old pension scheme. Talking about the income from tax only, then these states spend up to 63 percent of the income from tax on free schemes.

Financial deficit of states increased

The report said that in the last financial year 2021-22, due to the corona epidemic, the average financial deficit of 18 states has increased by 50 basis points from the initial estimate of the budget to four percent of the gross domestic product (GSDP) of the states. Of these, the financial deficit of six states has crossed four per cent of their GSDP. However, 11 states seem to be successful in keeping their financial deficit below 4 per cent.

States with a financial deficit estimate of more than four percent of GSDP in the financial year 21-22