New Delhi, July 18 -- States' fiscal deficit is expected to moderate to 3.4 per cent of Gross State Domestic Product (GSDP) in FY27, supported by stronger tax collections and an improvement in revenue receipts, according to an ICICI Bank report.

The report said the outlook for state finances has improved after a stronger start to the fiscal year, with higher State GST (SGST) collections, stamp duty receipts and other tax revenues expected to support fiscal consolidation in the coming months.

"While last year, receipts were seen to be moderating, this year, with a pick-up in nominal GDP, tax collections should improve, which bodes well for the deficit outlook," the report said.

According to the report, the fiscal deficit had widened to ...