Top States Exhibit Financial Prowess Amidst Growth Challenges

Gujarat, Karnataka, Maharashtra, and Odisha lead in fiscal strength, boasting strong revenue bases with state-own revenues constituting up to 80% of total receipts. Despite slower growth in state revenue sources, these states manage low debt and revenue deficits. Major emphasis is required on meeting capital expenditure by March 2025.

Gujarat, Karnataka, Maharashtra, and Odisha have emerged as the top-performing states in terms of financial strength, according to a report by CareEdge Ratings. These states hold a robust revenue base with state-own revenues (SOR) accounting for 60-80% of their total revenue receipts. Their low revenue deficits indicate a greater capacity for developmental spending, coupled with low debt levels, featuring debt-to-GSDP ratios ranging between 16-27%.

The report highlights these states' low leverage, with debt, including guarantees, to GSDP between 16-27%, and a comfortable interest payment to revenue receipts ratio averaging around 9%. However, it suggests a need for states to expedite infrastructure project spending in the final quarter of FY25 to fulfill capital expenditure ambitions.

Thus far, only 48% of the total capital budget of Rs 7.5 lakh crore has been deployed. Notably, capital expenditure on infrastructure and development by the top 15 states reached Rs 3.57 lakh crore in the first three quarters of FY25, 4% less than last year, partly due to election activities in the initial fiscal half.

From April 2024 to January 2025, the central government transferred Rs 10.74 lakh crore to states, marking a 31% increase over the previous year to bolster development pursuits. Although a 12% rise in total tax devolution is projected for FY25, it falls short of the 19% growth forecasted in the Union Budget, owing to a deceleration in state revenue growth.

Meanwhile, Goods and Services Tax (GST) collections from major Indian states improved by 9% from April to December of FY25 over the previous year's same period. The report notes a 15% growth in FY24 state GST collections, with continued improvement into FY25, driven by better tax compliance.

Key states, including Andhra Pradesh, Bihar, Gujarat, Haryana, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Odisha, Punjab, Rajasthan, Tamil Nadu, Telangana, Uttar Pradesh, and West Bengal, are at the forefront. (ANI)

(With inputs from agencies.)