The Comptroller and Auditor General of India (CAG) released its report on state finances for 2024-25 on Monday, highlighting widespread fiscal strain across all 28 states. The report shows that every state recorded a fiscal deficit, with 15 states exceeding the 3% of Gross State Domestic Product (GSDP) threshold.
Rising Liabilities and Expenditure Patterns
As of March 31, 2025, the combined liabilities of all states stood at Rs 90.51 lakh crore. Total budgetary expenditure reached Rs 51.20 lakh crore in 2024-25, with revenue expenditure accounting for nearly 80% of total spending. Committed expenditure on salaries, pensions, and interest payments exceeded 43% of combined revenue expenditure, varying from 74% in Nagaland to 29% in Maharashtra.
Shefali Srivastava Andaleeb, Director General (GA-I) at CAG, noted that committed expenditure, subsidies, and grants-in-aid together accounted for more than 61% of revenue expenditure. Subsidies alone represented over 10% of revenue expenditure in 2024-25.
Revenue and Liquidity Challenges
While 15 states recorded revenue surpluses, 13 remained in revenue deficit. However, some revenue-surplus states still resorted to Ways and Means Advances (WMA), indicating cash-flow pressures despite positive revenue balances. States' own tax revenue (SOTR) accounted for nearly 50% of combined revenue receipts of Rs 40.52 lakh crore, with State GST contributing over 43% of own tax revenues.
States' own tax revenue more than doubled from Rs 8.40 lakh crore in 2015-16 to Rs 20.31 lakh crore in 2024-25. The report noted improved average annual growth in tax collections during the post-GST period compared to the pre-GST era. However, the share of Grants-in-Aid and Central assistance in total state revenues declined over the decade, increasing reliance on states' own revenue mobilization.
Sectoral Spending and Focus Areas
Expenditure across social, economic, and general sectors remained broadly balanced. The economic sector accounted for 63% of total capital outlay, reflecting continued focus on infrastructure. Education remained the largest expenditure head among major functional sectors, followed by social welfare and energy.
CAG K. Sanjay Murthy expressed hope that the report would serve as an evidence-based resource for governments, policymakers, researchers, and citizens, contributing to greater fiscal transparency, accountability, and sustainability across states.
