BS EDIT: Thin Ice: States Are Sinking in Debt

By Business StandardPublished On Nov 6, 2025

The Ignored Half of India’s Finances

States spend two-thirds of public money but get little scrutiny. PRS data shows cracks that could stall India’s growth

Borrowing for Basics

In 2023-24, states spent 60% of revenue on pay, pensions, and subsidies — even borrowing to meet daily expenses

Capital Spending on Crutches

States’ infrastructure push depends on 50-year interest-free central loans. Without them, growth could falter fast

The Inequality Gap Widens

Rich states earn and spend more; poor states struggle. Fiscal divides are deepening India’s regional inequality

Populism’s Price Tag

Cash transfers for women surged to ₹1.68 trillion in 2025-26. Many states borrow to fund giveaways, risking debt traps

Debt on the Edge

States owe 27.5% of GDP — above safe limits. Hidden guarantees add strain. Fiscal discipline can’t wait any longer