In the fiscal year 2020-21, the states’ fiscal deficit increased sharply compared with the previous fiscal year and budget estimates. The gross state domestic product (GSDP) growth slowed considerably across 27 states for which data is available. Own- tax and non-tax revenues declined due to the decline in economic activity. Central transfers were lower than budgeted but grants increased in comparison with the previous year. Compared to 2019-20, both current and capital expenditures were higher in 2020-21. The deficits of states were affected by the fall in revenues. Budget estimates for 2022-23 project further consolidation in the fiscal deficit driven by an optimistic projection for an increase in revenues.