CRISIL has ranked Bihar as the top state in terms of GSDP (Gross State Domestic Product) growth in financial year 2017-18 in its latest report titled ‘States of growth 2.0’. Bihar managed to grab the top spot by registering 11.3 percent GSDP growth in fiscal 2018. This is significant because the state was ranked at eighth spot in fiscal 2017 with 9.9 percent GSDP growth.
Madhya Pradesh, which was among the top three states in FY17, slid in fiscal 2018, due to slippage on fiscal deficit, noted the CRISIL report.
The report also said that as many as 12 of 17 states in the non-special category of Reserve Bank of India managed to grow faster than the 6.7% pace hit by India's economy in fiscal 2018,
The report, however, added that the growth is not equitable and the chasm is only increasing. According to the report, states with low income have failed to maintain high growth long enough to bridge the per-capita income gap with those states which have high income.
The growth has also not been conducive enough to help in the creations of new jobs in most of these states as lower growth has been recorded in 11 states in ‘employment-intensive’ sectors such as manufacturing, construction and trade, and hotels transport and communication services, compared with the job creation at national level.
The report also highlighted that Uttar Pradesh, Karnataka and Bihar were the biggest spenders overall, while Rajasthan, Jharkhand, Uttar Pradesh and Telangana were among the states that spent a major part of their budget on capex.
Dipti Deshpande, Senior Economist, CRISIL Ltd, said that the states must keep in mind their debt profiles. She added that the debt ratios have jumped in many states due to the assimilation of Ujwal Discom Assurance Yojana (UDAY), farm loan waivers, and Pay Commission hikes.
The CRISIL report showed that the debt ratio was over 30% in Punjab, Rajasthan and Kerala, while it was relatively low in Chhattisgarh, Maharashtra and Karnataka.
It may be recalled that CRISIL's previous report was published in January 2018 and it focussed on gross domestic product (GDP) growth, inflation and fiscal health of states between fiscals 2013 and 2017, while the recent States of growth 2.0 is focused on how macroeconomic performance evolved in fiscal 2018. It offers a deep insights on expenditure patterns, quality of spending, and fiscal sustainability of different states.