New Delhi, September 23: Indian states’ spending on salaries, pensions and interest payments has surged 2.5 times over the past decade, making up the largest share of their revenue expenditure, the Comptroller and Auditor General of India (CAG) said in a report released on Monday.
The watchdog said committed expenditure rose to 15.64 trillion rupees ($187 billion) in the financial year 2022/23 from 6.27 trillion rupees in 2013/14. Salaries formed the biggest component, followed by pensions and interest payments.
Revenue expenditure by states grew 2.66 times in the same period, while subsidies jumped more than three-fold to 3.1 trillion rupees in 2022/23, the report on state finances showed. Grants-in-aid accounted for another 11.26 trillion rupees. Together, committed expenditure, subsidies and grants made up over 83% of states’ revenue spending last year.
In 19 states, pensions exceeded interest payments, but in nine others – including Andhra Pradesh, Gujarat, Haryana, Karnataka, Punjab, Rajasthan, Tamil Nadu, Telangana and West Bengal – interest costs were higher, reflecting heavier debt servicing requirements.
States’ revenue expenditure in 2022/23 stood at 35.96 trillion rupees, equal to 84.7% of their total spending and 13.9% of combined gross state domestic product (GSDP), the report said.
On fiscal targets, 17 states had budgeted for revenue surplus in 2022/23, but five – Assam, Bihar, Himachal Pradesh, Meghalaya and Rajasthan – slipped into deficit. Of the five states that had targeted revenue deficits, Karnataka turned to a surplus, Maharashtra contained its gap, while Andhra Pradesh, Haryana and Punjab overshot their goals.
The report also noted that nine states in deficit, including Kerala, Tamil Nadu and West Bengal, received revenue deficit grants from the Finance Commission during the year.
