NEW DELHI: 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 have a strong revenue base, with state-own revenues (SOR) making up 60-80 per cent of their total revenue receipts, and have a low revenue deficit, which means they can spend more on development.
They also have low debt levels, with debt-to-GSDP ratios between 16-27 per cent. It said, “These states carry low leverage with Debt (including guarantees) to GSDP in the 16-27 per cent range, the interest/RR is low, averaging approx. 9 per cent”.
The report also suggested that while tax revenues are growing, states need to accelerate their spending on infrastructure projects in the final quarter of FY25 to meet their capital expenditure goals. So far, states have used only 48 per cent of their total capital spending budget of Rs 7.5 lakh crore. This means they will need to spend a large amount in the last quarter, especially in March 2025, to meet their targets.
The capital expenditure (spending on infrastructure and development projects) of the top 15 states was Rs 3.57 lakh crore in the first nine months of FY25. This is 4 per cent lower than last year, mainly due to the impact of elections in the first half of the financial year.
The report also noted that during April 2024 to January 2025, the central government transferred Rs 10.74 lakh crore to states as their share of taxes. This is 31 per cent higher than last year and is aimed at helping states spend more on development projects.
The report expects total tax devolution to increase by 12 per cent in FY25 compared to FY24. However, this growth is lower than the expected 19 per cent increase estimated in the Union Budget due to slower growth in state revenue sources.
However, the Goods and Services Tax (GST) collection by major states in India increased by 9 per cent in the first nine months (April to December) of the current financial year (FY25) compared to the same period last year. The report highlighted that state GST collections had grown by 15 per cent in FY24 and continued to rise in FY25 due to better tax compliance.
It said, “State GST collections grew by 15 per cent in FY24 (Prov.) and 9 per cent in 9MFY25 (Prov.) over 9MFY24 (Prov.), driven by enhanced compliance”. These states are Andhra Pradesh, Bihar, Gujarat, Haryana, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Odisha, Punjab, Rajasthan, Tamil Nadu, Telangana, Uttar Pradesh, and West Bengal. (ANI)
