State Government Finances: Rising Deficits and Bond Market Impact

State governments in India are facing financial difficulties.

They are borrowing more money by issuing bonds because their tax revenue is growing slower.

This is partly due to the central government cutting income taxes and GST.

These governments are also receiving less financial help from the central government.

While capital spending has increased, the financial pressures are likely to continue.

This could make it more expensive for these governments to borrow money in the future, impacting the bond market.