State revenues are projected to grow 7–9% in 2025–26, led by GST, liquor taxes, and central transfers. But the pace remains below the decadal average
Dependence on central transfers is rising. States now rely on the Centre for 42% of their revenues, limiting their fiscal autonomy
State debt has reached 28.5% of GDP, breaching the 20% limit. Twelve states now carry debt above 35% of GSDP, signalling growing fiscal pressure
States have shown discipline, keeping deficits near 3% of GSDP. Yet, revenue-generation reforms remain critical for sustainable growth
Weak GST compliance, poor property tax tracking, and underpriced public services are hurting state revenue capacity
The Centre must ensure timely transfers. Excessive use of cesses and surcharges distorts fiscal federalism and must be curbed