Fiscal weakness

State finances can impede growth

The Covid-19 pandemic-related disruption has had a material impact on government finances all over the world. In the Indian context, while the focus usually is on the Union government, it is critical to not lose sight of state government finances as they do the bulk of the general government spending. States were at the forefront of battling the pandemic, both in terms of providing medical care and supporting the vulnerable sections of the population at a time when revenues took a severe hit. Their finances, as a result, were hit considerably. However, aside from this one-time shock, there are other