The report is first of its kind, providing comprehensive data, analysis, and trends on fiscal parameters for all 28 states over a 10-year period (2013-14 to 2022-23).
Key Findings
- States’ total debt in 2022-23 was 22.17 % of the country’s Gross Domestic Product (GDP).
- Fiscal Responsibility and Budget Management (FRBM)Act (2003) benchmark: State Government Debt shall be 20% of GDP by 2024-25
- Debt-to-GSDP Ratio: Highest ratio of 40.35 per cent was recorded in Punjab, followed by Nagaland (37.15 per cent) and West Bengal (33.70 per cent)
- Fiscal Deficit: All 28 States in deficit; ranged from Gujarat (0.76% of GSDP) to Himachal Pradesh (6.46%).
- FRBM benchmark: States needed to achieve a fiscal deficit of 3.5 % of GSDP in FY 2022-23.
- Wide gaps in revenue capacity: States’ Own Tax Revenue (SOTR) share 70% in Haryana and as low as 9% in Arunachal Pradesh.
Why is public debt so high in many Indian states?
- Rising subsidy burden: Driven by farm loan waivers, free/subsidised services (like electricity to agriculture and households), cash transfers to farmers, youth, women etc.
- High Committed Expenditures (E.g. interest payments, expenditure on salaries and wages, etc.): During the period 2013-14 to 2022-23, its share has remained above 42 % of the revenue expenditure and above 6 % of the GSDP (except in 2013-14 and 2016-17).
- Other: Limited Revenue Mobilisation (E.g., Dependence on GST) etc.