States hold a third of India’s public debt but handle most spending. Rising fiscal disparities threaten economic stability
Punjab and Himachal Pradesh exceed 40 per cent debt-to-GSDP. By 2027-28, more states may follow, worsening fiscal stress
Odisha leads in financial management, while Punjab lags. Unequal debt levels could deepen economic imbalances
High debt limits spending on education and infrastructure. Low-debt states invest more, widening development gaps
States fail to follow fiscal rules. RBI interventions distort markets, making reforms urgent
Stronger fiscal rules and better revenue management are needed to prevent deepening fiscal crises