The disparity in revenue among Indian states continues to be significant, with some states experiencing growth in revenue while others are facing contraction, according to a report by the National Stock Exchange.
The report emphasized that there is a huge difference in revenue receipts among states, with the central government budgeting a 14.7% growth in revenue receipts, while many states have set lower targets.
States like Telangana, Karnataka, Jharkhand, and Uttar Pradesh have projected higher growth in revenue receipts, whereas states in the eastern and northern regions, such as Himachal Pradesh, Meghalaya, Assam, and Mizoram, are experiencing slower revenue growth.
The report suggests that there is a likelihood of moderating growth in revenue receipts in FY25. Despite these variations, India’s overall revenue to GDP ratio remains lower than that of most other emerging markets.
However, there has been an improvement in the revenue collection performance of states over the years, with the revenue receipts to Gross State Domestic Product (GSDP) ratio for a sample group of states increasing to 15.2% in FY25. This improvement reflects better revenue management and collection efforts by states.
States with weaker fiscal growth will need to focus on implementing reforms and policies to enhance their revenue generation and avoid falling further behind. The wide gap between states underscores the ongoing challenge of addressing inter-state disparities and promoting more balanced growth across the country.
