India’s Top States to See 8-10% Revenue Growth in 2024-25, Says Crisil Ratings
New Delhi, India – Revenue for India’s leading states, which make up over 90% of the country’s gross state domestic product, is projected to grow by 8-10% in the financial year 2024-25, according to Crisil Ratings.
Key Drivers of Growth
The rating agency forecasts that the top states’ revenue will reach Rs 38 lakh crore, up from a 7.5% growth in the previous fiscal year. The primary drivers of this growth will be:
- GST Collections: Expected to grow by 13-14% due to economic resilience, better tax compliance, and a shift towards organized sectors.
- Central Tax Devolutions: Projected to increase by 12-13%, linked to overall tax collections by the Centre.
Other Revenue Sources
Revenue from liquor sales, which accounts for 10% of total revenue, is expected to grow by 5-7% due to rising consumption. Sales tax collections from petroleum products will see a modest 3-4% growth, driven by higher fuel consumption despite recent price cuts.
Challenges and Recommendations
Grants from the Centre are expected to grow by 4-5%, in line with the Union Budget. However, Crisil Ratings cautions that global economic volatility could impact these projections. To ensure sustainable growth, states need to focus on expanding their own revenues and improving collection efficiencies.
Expert Insights
Anuj Sethi, Senior Director at Crisil Ratings, emphasized the importance of GST collections and economic formalization. Aditya Jhaver, Director at Crisil Ratings, noted the impact of fuel consumption and price cuts on sales tax collections.