States' spending on salaries, pensions and interest payments going down

Capex on social sector rises; differences in GST accounting make trends on the revenue front unclear

In public discourse, the Centre’s Budgets typically get more attention than those of the states. But collectively, the states spend much more than the Centre. 

Their spending plays a key role in shaping the country’s development story. A recent comprehensive study by economists at the National Institute of Public Finance and Policy (NIPFP), led by Pinaki Chakraborty, sheds light on how states’ expenditures and revenues have fared over the past few years.

Four broad trends emerge

On the expenditure side, state governments have been able to bring down the share of their ‘committed expenditure’ on wages, salaries, pensions and interest