Revenue Growth in Indian States: A Mixed Picture
The National Stock Exchange has released a report highlighting the significant revenue disparity among Indian states. While some states have shown growth in revenue for the fiscal year 2025, others have experienced a contraction.
Central and State Revenue Targets
The central government has budgeted a 14.7% growth in revenue receipts. However, most states have set more modest targets, with exceptions like Telangana, Karnataka, Jharkhand, and Uttar Pradesh, which have projected higher growth.
Regional Disparities
States in the eastern and northern regions, such as Himachal Pradesh, Meghalaya, Assam, and Mizoram, are showing slower revenue growth, with some even budgeting for a contraction.
Overall Revenue Performance
Despite these disparities, India’s revenue to GDP ratio remains lower than other emerging markets. However, there has been an improvement in the revenue collection performance of states over the years. For FY25, the revenue receipts to Gross State Domestic Product (GSDP) ratio for a sample group of states has increased to 15.2% from an average of 14.8% over the past 12 years.
Challenges and Opportunities
The report emphasizes the need for states with weaker fiscal growth to focus on reforms and policies to boost revenue generation and address inter-state disparities for more balanced growth across the country.
Doubts Revealed
Revenue Growth -: Revenue growth means the increase in the amount of money that a state earns over time. It is important because it shows how well a state is doing financially.
Telangana -: Telangana is a state in southern India. It was formed in 2014 when it separated from Andhra Pradesh.
Karnataka -: Karnataka is a state in the southwestern region of India. It is known for its technology industry and beautiful landscapes.
Jharkhand -: Jharkhand is a state in eastern India. It is rich in minerals and has many forests.
Uttar Pradesh -: Uttar Pradesh is a state in northern India. It is the most populous state in the country and has many historical sites.
National Stock Exchange -: The National Stock Exchange (NSE) is a place where people buy and sell shares of companies in India. It helps in understanding the financial health of the country.
FY25 -: FY25 stands for the financial year 2025. A financial year is a period used for calculating annual financial statements in businesses and governments.
Revenue receipts -: Revenue receipts are the money that the government earns from various sources like taxes, fees, and fines. It is used to fund public services and development projects.
GDP ratio -: GDP ratio refers to the comparison of a state’s revenue to its Gross Domestic Product (GDP). GDP is the total value of goods and services produced in a state or country.
Reforms -: Reforms are changes made to improve a system. In this context, it means changes in policies to help states earn more money.
