Indian States Face New Fiscal Threats After Election Upsets

Fiscal deficits are likely to widen in two Indian states where incumbents were swept out of power in elections on the back of populist spending measures, economists said.

In Tamil Nadu, a party led by a well-known local actor ousted the former government with promises of free gas cylinders, gold coins and cash support to voters. In the eastern state of West Bengal, Prime Minister Narendra Modi’s party won a resounding victory over opponents with pledges of larger cash transfers and expanded welfare benefits.