New Delhi: A new report by the National Stock Exchange (NSE) highlights that revenue disparities among Indian states remain substantial, with some regions experiencing robust revenue growth and others struggling with contraction. While the central government has projected a 14.7% increase in revenue receipts for FY25, many states have set more conservative targets, underscoring the uneven fiscal landscape.
States with Higher Revenue Growth
According to the report, a few states, including Telangana, Karnataka, Jharkhand, and Uttar Pradesh, have projected higher growth in revenue receipts for FY25, exceeding the central government’s estimates. These states are leading in fiscal performance, setting ambitious revenue targets despite broader economic challenges.
Slower Growth in Northern and Eastern States
In contrast, states such as Himachal Pradesh, Meghalaya, Assam, and Mizoram have either budgeted for revenue contraction or minimal growth, reflecting fiscal stress. The report cautions that slower revenue collection in these regions could moderate economic growth in FY25.
Revenue to GDP Ratio Shows Modest Progress
Despite the disparities, the report notes some improvement in the overall revenue collection performance of Indian states. The revenue receipts to Gross State Domestic Product (GSDP) ratio for a sample group of states is expected to reach 15.2% in FY25, compared to the 12-year average of 14.8%. This modest increase reflects better revenue management and collection efforts.
Challenges Ahead
While the improvement is encouraging, the significant gap between states underscores the need for reforms to ensure balanced economic growth across the country. The report recommends that states with weaker fiscal growth focus on policies to enhance revenue generation and avoid widening the disparity further.
India’s revenue-to-GDP ratio, however, remains below that of many other emerging markets, suggesting room for further improvement in fiscal management at both state and national levels.
