With improvement in economic growth, the financial position of the states has started showing improvement and they are moving towards the path of fiscal consolidation, says a RBI report. “The budgetary position of States in 2010-11 indicated a turnaround from the expansionary fiscal stance in 2008-09 and 2009-10 to a fiscal consolidation path in 2010-11,” said State Finances:A Study of Budgets of 2010-11, released by RBI.

An improvement in State finances is evident with a majority of the States budgeting either a revenue surplus or a lower revenue deficit in 2010-11 (Budget Estimate) as compared with 2009-10 (Revised Estimate), it said.

At a consolidated level, the revenue deficit is placed lower at 0.3% of GDP during 2010-11 (Budget Estimate) as against 0.7% in 2009-10 (Revised Estimate) reflecting compression in revenue expenditure.

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