RBI warns five states against high debt stress

Mumbai, June 21 (KNN) The five states that are highly stressed according to the Reserve Bank of India (RBI) are Bihar, Kerala, Punjab, Rajasthan and West Bengal in view of the debt/ gross state domestic product (GSDP) ratio.

As per the RBI study on state finances released last week, among the 10 states listed initially the central bank has identified Bihar, Kerala, Punjab, Rajasthan and West Bengal as highlighted stressed states.

The state of Punjab is expected to remain in the worst position as its debt-GSDP ratio is projected to exceed 45 per cent in 2026-27, with further deterioration in its fiscal position.

Rajasthan, Kerala and West Bengal are projected to exceed the debt-GSDP ratio of 35 per cent by 2026-27. These states will need to undertake significant corrective steps to stabilise their debt levels.

“Based on the debt-GSDP ratio in 2020-21, Punjab, Rajasthan, Kerala, West Bengal, Bihar, Andhra Pradesh, Jharkhand, Madhya Pradesh, Uttar Pradesh and Haryana turn out to be the states with the highest debt burden,” the study said.

These 10 states account for around half of the total expenditure by all state governments in India. (KNN Bureau)