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Sunday, November 30, 2025 | 08:43 PM ISTहिंदी में पढें
State debt dynamics: Strict fiscal rules needed to reverse disparities
The RBI's frequent intervention to cap spreads in bond markets of heavily indebted states also leads to market indiscipline
 "Finance Minister Nirmala Sitharaman expedited fiscal consolidation, projecting it at 4.9 per cent of gross domestic product (GDP) for 2024-25, down from the Interim Budget estimate of 5.1 per cent. This was despite an increased spending on employment")
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The Union Budget draws significant attention, but state finances are equally important. A new working paper from the National Council of Applied Economic Research examines Indian states’ public debt and risks. States hold a third of India’s public debt, account for about two-thirds of general government expenditure, and a third of revenue collection. The paper rightly raises concern about fiscal discipline and divergence in debt burdens among states. Understanding these dynamics is crucial for policymakers to tailor interventions.
From 2012-13 to 2022-23, the debt to gross state domestic product (GSDP) ratio has risen in all but four states, namely, Gujarat,
