States may not return to pre-covid debt levels by FY26: 15th Finance Commission’s roadmap
State debts by 2025-26 could still be 32.5% of the total GSDP, against 27.3% in FY20, the 15th Finance Commission’s estimates show. Kerala is projected to see the biggest decline in debt ratio between FY21 and FY26
The covid-19 pandemic disrupted the finances of India’s states in the ongoing fiscal year. Expense needs grew and public debt swelled, while revenues shrank. While most states could return to pre-pandemic output levels next year, their fiscal indicators are likely to remain strained for much longer, projections by the 15th Finance Commission (15-FC) show.