{"id":55532,"date":"2025-09-29T20:50:54","date_gmt":"2025-09-29T15:20:54","guid":{"rendered":"https:\/\/www.nextias.com\/ca\/?p=55532"},"modified":"2025-10-04T15:39:25","modified_gmt":"2025-10-04T10:09:25","slug":"indian-states-macro-fiscal-health","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/current-affairs\/29-09-2025\/indian-states-macro-fiscal-health","title":{"rendered":"Analysing Indian States\u2019 Macro-Fiscal Health"},"content":{"rendered":"\n<p><strong>Syllabus: GS3\/Economy<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Context<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>A recent <strong>decadal <\/strong><a href=\"https:\/\/www.nextias.com\/ca\/current-affairs\/20-09-2025\/cag-report-states-fiscal-health\"><strong>analysis by the Comptroller and Auditor General (CAG)<\/strong><\/a> reveals how Indian States are managing their finances \u2014 balancing growth, welfare, and sustainability.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>About the Macro Fiscal Health of Indian States<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>It refers to the overall financial stability, efficiency, and sustainability of State-level public finances.<\/li>\n\n\n\n<li>It\u2019s a composite measure that evaluates how States in India manage their revenues, expenditures, deficits, and debt, and ensures adequate investment in development sectors like health, education, and infrastructure.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Key Dimensions of Macro-Fiscal Health<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Revenue Mobilization:<\/strong>\n<ul class=\"wp-block-list\">\n<li><strong>Own Revenue:<\/strong> Income from State taxes (e.g., VAT, excise) and non-tax sources (e.g., royalties, lotteries).<\/li>\n\n\n\n<li><strong>Transfers from Centre:<\/strong> Devolution of central taxes and grants-in-aid.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Expenditure Quality:<\/strong>\n<ul class=\"wp-block-list\">\n<li><strong>Revenue Expenditure:<\/strong> Day-to-day costs like salaries, subsidies, and interest payments.<\/li>\n\n\n\n<li><strong>Capital Expenditure:<\/strong> Long-term investments in infrastructure and development.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Deficit and Debt Management:<\/strong>\n<ul class=\"wp-block-list\">\n<li><strong>Fiscal Deficit: <\/strong>The gap between total expenditure and revenue (excluding borrowings).<\/li>\n\n\n\n<li><strong>Revenue Deficit:<\/strong> When revenue expenditure exceeds revenue receipts.<\/li>\n\n\n\n<li><strong>Debt-to-GSDP Ratio: <\/strong>Indicates a State\u2019s ability to repay its debt.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Developmental Spending:<\/strong> It includes allocations for health, education, rural development, and welfare.\n<ul class=\"wp-block-list\">\n<li>States with strong fiscal health maintain high developmental outlays relative to their GSDP.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Government Assessment Tools<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><a href=\"https:\/\/www.nextias.com\/ca\/current-affairs\/25-01-2025\/fiscal-health-index-fhi-report\"><strong>Fiscal Health Index (FHI) 2025 by NITI Aayog<\/strong><\/a><strong>: <\/strong>Evaluates 18 major States in terms of their contribution to India\u2019s GDP, demography, total public expenditure, revenues, and overall fiscal stability.\n<ul class=\"wp-block-list\">\n<li><strong>Top Performers:<\/strong> Odisha, Chhattisgarh, Goa, Jharkhand.<\/li>\n\n\n\n<li><strong>Struggling States:<\/strong> Punjab, Andhra Pradesh, West Bengal, Kerala.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>CAG\u2019s Decadal Analysis: <\/strong>It tracks trends in borrowing, revenue sources, and expenditure patterns.\n<ul class=\"wp-block-list\">\n<li>It highlights how States finance deficits \u2014 often through loans and bonds that must be repaid with interest.<\/li>\n\n\n\n<li>For <strong>Key Findings of CAG\u2019s Decadal Analysis<\/strong>, please follow the link<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Analysing CAG\u2019s Decadal Report of Macro Fiscal Health of Indian States<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Revenue Surplus vs Fiscal Reality: Uttar Pradesh<\/strong> recorded a surprising revenue surplus of \u20b937,000 crore, more than <strong>double that of Gujarat.<\/strong>\n<ul class=\"wp-block-list\">\n<li>However, this surplus was <strong>largely driven by central transfers<\/strong>, not internal revenue generation.<\/li>\n\n\n\n<li>Only about 42% of UP\u2019s revenue came from its own sources, raising concerns about fiscal autonomy.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Vertical Fiscal Imbalance:<\/strong> States like <strong>Maharashtra generated nearly 70% of their revenue internally<\/strong>, while poorer States relied heavily on the Centre.\n<ul class=\"wp-block-list\">\n<li>It affects States\u2019 ability to plan and invest independently, especially in welfare and infrastructure.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Borrowing Trends:<\/strong> Many States were deep in deficit, spending far more than they earned, in the early 2000s.\n<ul class=\"wp-block-list\">\n<li>Over the decade, borrowing patterns shifted, with States increasingly relying on market loans and bonds to finance deficits.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Expenditure Priorities:<\/strong> Need for <strong>higher capital spending (roads, hospitals, schools) <\/strong>rather than excessive routine expenditure (salaries, subsidies).\n<ul class=\"wp-block-list\">\n<li>It emphasized that fiscal choices directly impact public services \u2014 like whether a school gets enough teachers or a hospital receives new equipment.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<p><a href=\"https:\/\/www.thehindu.com\/business\/Economy\/analysing-indian-states-macro-fiscal-health\/article70105107.ece\" target=\"_blank\" rel=\"noopener\">Source: TH<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p><strong>Context<\/strong><\/p>\n<li class=\"ms-5\">A recent decadal analysis by the Comptroller and Auditor General (CAG) reveals how Indian States are managing their finances \u2014 balancing growth, welfare, and sustainability.<\/li>\n<p><\/p>\n<p><strong>About the Macro Fiscal Health of Indian States<\/strong><\/p>\n<li class=\"ms-5\">It refers to the overall financial stability, efficiency, and sustainability of State-level public finances.<\/li>\n<li class=\"ms-5\">It\u2019s a composite measure that evaluates how States in India manage their revenues, expenditures, deficits, and debt, and ensures adequate investment in development sectors like health, education, and infrastructure.<\/li>\n<p><a href=\"https:\/\/www.nextias.com\/ca\/current-affairs\/29-09-2025\/indian-states-macro-fiscal-health\" class=\"btn btn-primary btn-sm float-end\">Read\u00a0More<\/a><\/p>\n","protected":false},"author":15,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-55532","post","type-post","status-publish","format-standard","hentry","category-current-affairs"],"acf":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/55532","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=55532"}],"version-history":[{"count":3,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/55532\/revisions"}],"predecessor-version":[{"id":55985,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/55532\/revisions\/55985"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=55532"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=55532"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=55532"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}