The Comptroller and Auditor General of India (CAG) has released its decadal report on state finances, highlighting a sharp contrast in fiscal health across the country. While 16 states ended 2022-23 with revenue surpluses, 12 others posted deficits, with Tamil Nadu ranking second-worst after Andhra Pradesh.
UP Tops Revenue Surplus List
Uttar Pradesh led the surplus states, reporting a revenue surplus of ₹37,000 crore in 2022-23, shedding its “Bimaru” tag. Madhya Pradesh also joined the surplus list, marking a turnaround for another state historically considered economically weak.
Other major surplus states included:
- Gujarat: ₹19,865 crore
- Odisha: ₹19,456 crore
- Jharkhand: ₹13,564 crore
- Karnataka: ₹13,496 crore
- Chhattisgarh: ₹8,592 crore
- Telangana: ₹5,944 crore
- Uttarakhand: ₹5,310 crore
- Goa: ₹2,399 crore
Several northeastern states – Arunachal Pradesh, Manipur, Mizoram, Nagaland, Tripura, and Sikkim – also figured in the revenue surplus category. Of the 16 surplus states, at least 10 are governed by the BJP, which the report notes may reflect political stability’s role in fiscal health.
TN Among Worst Deficit States
On the deficit side, Andhra Pradesh posted the largest shortfall of ₹43,488 crore, followed by Tamil Nadu at ₹36,215 crore. Other deficit states included:
- Rajasthan: ₹31,491 crore
- West Bengal: ₹27,295 crore
- Punjab: ₹26,045 crore
- Haryana: ₹17,212 crore
- Assam: ₹12,072 crore
- Bihar: ₹11,288 crore
- Kerala: ₹9,226 crore
- Himachal Pradesh: ₹6,336 crore
- Maharashtra: ₹1,936 crore
- Meghalaya: ₹44 crore
The CAG flagged that West Bengal, Kerala, Himachal Pradesh, and Punjab are increasingly dependent on Revenue Deficit Grants from the Centre to bridge gaps.
Central Assistance and Deficit Grants
In FY23, the Finance Commission allocated ₹1,72,849 crore in grants to states, of which ₹86,201 crore went specifically for revenue deficit financing. The biggest recipients were:
- West Bengal: 16% of total grants
- Kerala: 15%
- Andhra Pradesh: 12%
- Himachal Pradesh: 11%
- Punjab: 10%
States Strengthening Own Revenues
Some states, however, have managed to fund most of their spending from their own tax and non-tax collections. The leaders were:
- Haryana: 80%+ of revenue from own sources
- Telangana: 79%
- Maharashtra: 73%
- Gujarat: 72%
- Karnataka: 69%
- Tamil Nadu: 69%
- Goa: 68%
By contrast, northeastern states, Bihar, and Himachal Pradesh generated less than 40% of revenue internally, making them heavily reliant on central transfers.
Own Tax Revenue Patterns
The report further noted that six states – Haryana, Maharashtra, Telangana, Karnataka, Gujarat, and Tamil Nadu collected over 60% of their revenue from their own taxes.
Northeastern states such as Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, and Tripura recorded below 20% own tax revenue, underscoring their dependence on central support.
Other groupings included:
- 60–70%: Karnataka, Tamil Nadu, Goa, Kerala
- 50–60%: Andhra Pradesh, Rajasthan, Punjab, Chhattisgarh
- 40–50%: Jharkhand, Madhya Pradesh, Uttar Pradesh, West Bengal, Uttarakhand
Key Revenue Sources
The CAG identified major streams of state revenue as:
- State GST (SGST)
- Value Added Tax (VAT)
- Excise duties on alcohol, petroleum products, and electricity (outside GST purview)
(With inputs from Indian Masterminds)
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