BS EDIT: Union Budget: The state finances connection
Published On Jan 27, 2025
The overlooked link
States handle two-thirds of public spending and one-third of revenue. Their fiscal health is critical for India’s economy
The fiscal health index
NITI Aayog’s index ranks 18 states on five parameters, including debt, revenue, and spending quality
Leaders and laggards
Odisha leads with fiscal discipline; Punjab struggles with rising debt and deficits
Fiscal challenges
States’ debt in 2023-24 was 28.5 per cent of GDP, far above recommended levels
Risks to reform
Welfare schemes and political pressures threaten productive spending in states
The way forward
Stronger fiscal rules and better subsidy tracking can ensure sustainable finances