State Finances in 2021-22

The state finances in India in 2021-22 were in a difficult situation, due to the impact of the COVID-19 pandemic. Many states faced fiscal deficits, and the debt-to-GDP ratio was rising.

The total revenue of the states in 2021-22 was Rs. 14,73,370 crore, while the total expenditure was Rs. 17,25,934 crore. This resulted in a fiscal deficit of Rs. 2,52,564 crore, which was 3.8% of the GDP.

The fiscal deficit was financed through a combination of borrowings and other means. The net market borrowings of the states in 2021-22 were Rs. 1,88,339 crore.

The states’ debt-to-GDP ratio in 2021-22 stood at 29.5%, which was an increase of 0.7 percentage points from the previous year.

MCQs

Here are some MCQs on the topic:

What is the difference between the state finances in 2020-21 and 2021-22?
- The fiscal deficit in 2021-22 was higher than in 2020-21.
- The debt-to-GDP ratio in 2021-22 was higher than in 2020-21.
- The net market borrowings in 2021-22 were higher than in 2020-21.
- All of the above
What are the factors that contributed to the deterioration of the state finances in 2021-22?
- The impact of the COVID-19 pandemic
- The decrease in tax revenue
- The increase in government spending
- All of the above
What are the challenges that the states face in managing their finances in the coming years?
- The high fiscal deficit
- The rising debt-to-GDP ratio
- The need to increase spending on infrastructure and social programs
- All of the above
What are the measures that the states can take to manage their finances better?
- Increase revenue
- Reduce expenditure
- Borrow less money
- All of the above
What is the importance of fiscal discipline for the health of the economy?
- Fiscal discipline helps to control inflation.
- Fiscal discipline helps to reduce the debt-to-GDP ratio.
- Fiscal discipline helps to create a stable environment for investment.
- All of the above

The answers are as follows: