New Delhi, June 16: Fiscal pressures across India’s states have intensified in FY25, with all 28 states reporting revenue or fiscal deficits, according to the latest report by the Comptroller and Auditor General (CAG) of India.
The report highlights that rising expenditure commitments, coupled with uneven revenue growth, have contributed to widening fiscal stress across several states. Increased spending on welfare programmes, subsidies, and infrastructure projects has added pressure on state finances, even as revenue mobilisation efforts continue.
The CAG noted that while states remain committed to maintaining development momentum, fiscal imbalances have emerged as a key concern in the post-pandemic economic recovery phase. The report underscores the need for improved expenditure management and stronger revenue augmentation strategies.
Experts observing the findings stated that persistent deficits across all states reflect structural challenges in fiscal consolidation, particularly in balancing developmental priorities with financial sustainability. They added that greater efficiency in public spending and enhanced fiscal discipline will be critical going forward.
The report further suggests that strengthening tax administration, improving compliance, and rationalising expenditure could help states move towards more sustainable fiscal paths in the medium term.
Despite fiscal stress, states continue to play a crucial role in driving public investment and delivering essential services, making fiscal health a key area of focus for overall economic stability.
The findings underline the importance of coordinated fiscal reforms to ensure long-term sustainability of state finances while supporting growth-oriented spending.