Rising committed expenditure squeezing states' development spending: PRS

PRS Legislative Research says states spend over 60 per cent of revenue on salaries, pensions, and subsidies, limiting room for growth and welfare spending

Indian states are increasingly facing fiscal constraints that threaten their ability to fund growth-enhancing and crucial development programs, with 62 per cent of their revenue receipts in the financial year 2024 (FY24) spent on committed expenditures such as salaries, pensions, interest payments and subsidies, according to the annual ‘State of State Finances 2025’ report by PRS Legislative Research.

 

Drawing on budget documents and audit accounts of all states and select Union Territories, the report finds that 53 per cent of revenue receipts were consumed by salaries, pensions, and interest payments, while subsidies accounted for another 9 per cent