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.