India's state-level fiscal rules have improved headline deficits, but the gains are fragile and uneven with major states still grappling with high debt levels, a World Bank report submitted to the 16th Finance Commission (FC) said. According to the report, despite nearly two decades of adoption of fiscal responsibility laws (FRLs), debt levels have not converged.
Governments should move away from universal subsidies towards tightly targeted transfers, backed by stricter eligibility norms, sunset clauses and periodic audits to curb leakages and improve spending efficiency, a joint study by Asian Development Bank and PwC has recommended.
State debt is rising because revenues are disappointingly weak. Ten states have debt ratios exceeding 30 per cent. In 2023-2024, states were borrowing simply to meet day-to-day expenses, points out Debashis Basu.
A shift appears underway in India's tax landscape. States with relatively smaller tax collections like Odisha and Telangana are emerging as the fastest-growing contributors to indirect and direct tax collections, respectively.
India's new national accounts will leverage new data sources and surveys to enhance the measurement of the country's informal economy, and introduce double deflation methods across sectors, replacing the current system that relies on a single deflation mechanism in Gross Domestic Product (GDP) calculations.
A new report indicates that increasing unconditional cash transfer schemes for women across 12 Indian states are impacting their fiscal health, with six states projecting revenue deficits.
A string of welfare schemes and promises tests the state's budget, which is already heavily dependent on central support and spends little as capital outlay.
Voters are weighing a stark trade-off -- between preserving a socially driven policy and reversing course to revive revenue, restore fiscal balance, and rein in the underground liquor economy.
If he cannot do it this term by using his bureaucracy and experts from different fields, it will be a tragedy, asserts Ramesh Menon.
Experts say the state's economy is grappling with hidden debt, rising welfare costs, and lack of transparency.
India's 18 largest states, accounting for over 90 per cent of the country's gross state domestic product (GSDP), are likely to record a marginal uptick in revenue growth to 7-9 per cent this year, from 6.6 per cent clocked in 2024-25 (FY25), rating agency Crisil said in a report on Tuesday. This growth, slower than the decadal average of about 10 per cent, would lift these states' cumulative revenue to around Rs 40 trillion in FY26 from Rs 37.26 trillion in FY25.
Uttar Pradesh, Gujarat and Odisha budgets maintain revenue surpluses despite welfare schemes while Rajasthan and West Bengal face high debt, fiscal deficits and low capital outlay.
'If in our cities, all urban bus transport services are free, then the taxpayers are paying for it, or if electricity were to be made free, that's a huge cost to the rest of the people'
'Each state is unique, but when it comes to finance, the fundamentals cannot be different.'
More than 58% of individual housing loans disbursed in 2023-2024 were more than 25 lakh in size.
'We don't have to compete with Maharashtra or Gujarat. We have to now start thinking about how we compete with the United States or China.'
The Sixteenth Finance Commission Chairman, Arvind Panagariya, has highlighted the challenges faced by southern states due to falling fertility rates and the subsequent increase in dependency ratios and ageing populations. He noted that Andhra Pradesh, Assam, and Tamil Nadu have raised concerns about these demographic trends. The Commission is currently touring the states to gather feedback and is expected to submit its recommendations after completing nationwide consultations.
The road ahead will require navigating complex financial challenges while fostering job creation and sustainable development in the region.
Using the debt-to-GDP ratio as a fiscal anchor aligns with efforts to promote fiscal transparency through proper disclosure of off-budget borrowings.
Schemes like the Mukhyamantri Majhi Ladki Bahin Yojana strain fiscal resources amid rising unemployment and prices of food items.
The state's economic health is in focus as it has consistently breached the fiscal deficit in eight of the last 10 years since Telangana's formation.
States are on track of fiscal consolidation with their total borrowings reaching Rs 5 trillion till October, which is 60 per cent of the projected borrowings of Rs 8.38 trillion till December 2024, according to data from official sources. Government officials said the lower-than-projected borrowings by states were a sign of prudent fiscal management by them. States announce their borrowing plans every quarter.
The new excise policy, introduced in Delhi in November 2021, made sweeping changes to the city's liquor trade.
South Haryana hasn't delivered a chief minister since 1967, when his father Rao Birender Singh was ousted from power. It's a legacy Rao Inderjit Singh is determined to reclaim.
Terrorists active in Jammu and Kashmir will either land in jail or be sent to jahannum (hell), Minister of State for Home Affairs Nityanand Rai said in the Rajya Sabha on Wednesday while asserting that the Modi government has zero tolerance for terrorism.
Populism gains momentum during election periods, and this trend is evident in at least four states: Telangana, Rajasthan, Madhya Pradesh and Chhattisgarh.
Per capita income in the state has consistently been below the national average for at least 24 years. However, it has narrowed the gap with the all-India level in recent years.
The new TDP government will have to mop up over Rs 10,000 crore to fulfill the financial requirements for July, a retired senior bureaucrat said.
The situation raises concerns about whether the promised freebies will once again push the state into a revenue deficit.
As political winds stir in these states, it's prudent to assess their economic landscapes.
The scarcity of resources is particularly evident in the case of Rajasthan compared to many other states.
Economies of Punjab, Andhra Pradesh, Madhya Pradesh, Uttarakhand and Haryana may have grown at a slower pace than the national economy during 2022-2023.
The states have outstanding liabilities of a whopping Rs 59,89,360 crore as on March 31, 2021, and the new sources of risk have emerged in the form of rising expenditure on non-merit freebies, the Supreme Court was told on Thursday by a PIL petitioner opposing irrational handouts.
However, finding the funds to fulfill them will be a herculean task.
Maharashtra's economic survey for 2002-03 says the state's economy was expected to grow at a lower rate of four per cent as against 6.8 per cent in the previous fiscal.
'Karnataka's finances are much healthier than the Union government's, which is indebted to nearly twice the extent of the state.'
Siddaramaiah, who hails from the shepherd Kuruba caste, holds the record for presenting the highest number of Budgets in Karnataka -- 13 so far. He has often spoken about how he was mocked in 1994 before he presented his first Budget. 'Some people asked, "Can he count sheep?",' Siddaramaiah told a regional news channel.
If Saudi Arabia, with just two Muslim holy sites of Mecca and Medina, can create a huge tourism-based ecosystem beyond oil, Ayodhya is sure to become the world's hottest religious tourism site in less than a decade, predicts R Jagannathan.
While the likelihood of these states going the Lanka or Greece way may be an alarming assessment, the financial situation of some states such as Punjab and West Bengal is indeed quite weak.
Various indicators make it amply clear that there are grave challenges facing the new government of Chief Minister Nitish Kumar, reports Indivjal Dhasmana.
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