Report provides a comprehensive analysis of the fiscal position of State governments covering the period 2022-23 (actuals) to 2024-25 (budget estimates) with focus on ‘Fiscal Reforms by States’. 

Overview of the Fiscal position of the States

• Gross Fiscal Deficit (GFD): 2.9% of the GDP (Gross Domestic Product) in 2023-24 compared to 2.7% (2022-23). 
  • GFD is the difference between total expenditure (Revenue and Capital) and the Revenue receipts including the Non-debt creating capital receipts. 
• Revenue Receipt: Declined marginally in 2022-23, due to lower tax devolution, etc.  
  • It refers to non-redeemable receipts that do not lead to a claim on the government.
• Capital expenditure: Improved further with capital outlay increasing to 2.6% of GDP in 2023-24 from 2.2 per cent in 2022-23.
  • It refers to expenditure that leads to creation of physical/financial assets. 
• Overall Debt: Declined to 28.5% of GDP (March 2024) from 31.8% GDP (March 2004) 
  • Fiscal Responsibility and Budget Management (FRBM) Review Committee (2017) recommends it to 20%

Key Reforms taken by the States

• Institutional reforms:  Setting up of State Institutions of transformation under State Support Mission of NITI Aayog, etc. 
• Expenditure Reforms: Use of Direct Benefit Transfers (DBT). 
  • E.g., States like Telangana is implementing Rythu Bandhu scheme through DBT.
• Borrowing Reforms: Increased shift towards market borrowings in the financing of GFD from 17% in 2005-06 to 79% in 2024-25 (BE)