Farm Support To Raise States' Deficit In Election Year: India Ratings

The cumulative fiscal deficit of the states is expected to rise following the announcement of farm support packages ahead of general elections due by May, India Ratings and Research, the Indian arm of Fitch Ratings, said on Monday.

The aggregate budget deficit of the country's states is estimated to increase to 3.2 per cent of gross domestic product in the next financial year beginning April, compared with 2.8 per cent estimated for the current year, said Devendra Pant, chief economist of India Ratings and Research.

"The competitive populism, in the nature of farm loan waivers and other financial support schemes, is hitting the capital spending and state finances," he said.

($1 = Rs 71.3690)