Revenue Disparity Among Indian States: A Growing Concern in FY25

A recent report by the National Stock Exchange underscores significant revenue disparity among Indian states in FY25. While states like Telangana, Karnataka, Jharkhand, and Uttar Pradesh project higher growth, others experience contraction. Despite improvements in the revenue-to-GSDP ratio, inter-state disparities persist, necessitating reforms for balanced national growth.

The economic landscape across Indian states remains uneven as revenue disparities continue to be a pressing issue, according to a recent report by the National Stock Exchange. While the central government has forecasted a 14.7% growth in revenue receipts for FY25, numerous states have tempered their expectations with more modest targets.

The report points out that only states like Telangana, Karnataka, Jharkhand, and Uttar Pradesh have set ambitious revenue growth projections aligning more closely with the central estimates. Conversely, a number of states, particularly from the eastern and northern regions such as Himachal Pradesh, Meghalaya, Assam, and Mizoram, anticipate slower growth or even downturns in their revenue collections compared to the FY24 revised estimates.

Despite these challenges, there has been a slight uptick in revenue performance over the years. The revenue receipts to Gross State Domestic Product (GSDP) ratio has improved to 15.2% from a past average of 14.8% over 12 years. This reflects ongoing efforts in better revenue management, yet the persistent gap highlights the need for reforms to support states lagging in fiscal growth, ensuring more equitable economic progress nationwide.

(With inputs from agencies.)