New Delhi: The Comptroller and Auditor General of India (CAG) has released a landmark decadal report analyzing the economic performance of Indian states, revealing that 16 states ended the fiscal year 2022-23 with a revenue surplus. Leading this elite group is Uttar Pradesh, shedding its erstwhile Bimaru tag by posting a massive revenue surplus of Rs 37,000 crore.
Surprisingly, Madhya Pradesh, another state historically seen as economically weaker, also joins the revenue surplus club, signaling a positive shift in fiscal health among former “sick” states.
Top Revenue Surplus States and Surprises
Apart from Uttar Pradesh and Madhya Pradesh, the states registering significant revenue surpluses include:
- Gujarat: Rs 19,865 crore
- Odisha: Rs 19,456 crore
- Jharkhand: Rs 13,564 crore
- Karnataka: Rs 13,496 crore
- Chhattisgarh: Rs 8,592 crore
- Telangana: Rs 5,944 crore
- Uttarakhand: Rs 5,310 crore
- Goa: Rs 2,399 crore
Additionally, several northeastern states – Arunachal Pradesh, Manipur, Mizoram, Nagaland, Tripura, and Sikkim – also featured in this list of fiscally sound states. Of the 16 revenue surplus states, at least 10 are governed by the BJP, indicating political stability may be a factor.
Read also: CAG Report: Energy & Finance PSUs Drive Rs 2.69 Lakh Crore Profit in FY22; ONGC, IOCL, NTPC Lead
States Facing Revenue Deficits
The report also flagged 12 states struggling with revenue deficits in 2022-23, including:
- Andhra Pradesh: -Rs 43,488 crore
- Tamil Nadu: -Rs 36,215 crore
- Rajasthan: -Rs 31,491 crore
- West Bengal: -Rs 27,295 crore
- Punjab: -Rs 26,045 crore
- Haryana: -Rs 17,212 crore
- Assam: -Rs 12,072 crore
- Bihar: -Rs 11,288 crore
- Himachal Pradesh: -Rs 6,336 crore
- Kerala: -Rs 9,226 crore
- Maharashtra: -Rs 1,936 crore
- Meghalaya: -Rs 44 crore
Notably, West Bengal, Kerala, Himachal Pradesh, and Punjab have increasingly relied on Revenue Deficit Grants from the central government to manage fiscal imbalances.
Central Assistance and Revenue Deficit Grants
According to the CAG report, West Bengal received the highest proportion of Revenue Deficit Grants (16% of total grants in FY23), followed by Kerala (15%), Andhra Pradesh (12%), Himachal Pradesh (11%), and Punjab (10%).
The total finance commission grants allocated to states amounted to Rs 1,72,849 crore, of which Rs 86,201 crore were specifically for bridging revenue deficits.
States Boosting Own Revenue Sources
The report highlights a contrasting picture of states that have successfully enhanced their own revenue streams – both tax and non-tax:
Haryana leads with over 80% of its total revenue generated from its own tax and non-tax sources.
Telangana follows closely with 79%, while Maharashtra (73%), Gujarat (72%), Karnataka (69%), Tamil Nadu (69%), and Goa (68%) also perform strongly.
In contrast, several northeastern states along with Bihar and Himachal Pradesh have their own revenue contributing less than 40% of total revenue, making them more dependent on central transfers.
Diverse Revenue Composition Across States
The states’ Own Tax Revenue (SOTR) composition reveals that –
Six states – Haryana, Maharashtra, Telangana, Karnataka, Gujarat, and Tamil Nadu — had SOTR above 60% of their total revenue receipts in 2022-23.
Northeastern states such as Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, and Tripura had SOTR below 20%, reflecting their dependence on central funding.
Other states’ own revenue proportions ranged as follows:
- Karnataka, Tamil Nadu, Goa, Kerala: 60%-70%
- Andhra Pradesh, Rajasthan, Punjab, Chhattisgarh: 50%-60%
- Jharkhand, Madhya Pradesh, Uttar Pradesh, West Bengal, Uttarakhand: 40%-50%
Key Revenue Sources for States
The major streams of own revenue for states include collections from –
- State Goods and Services Tax (SGST)
- Value Added Tax (VAT)
- Excise duty on alcoholic beverages, petroleum products, and electricity (which are outside GST framework)
These varied streams contribute to the overall fiscal autonomy and health of states.
Sustainable Economic Development
The CAG report underscores the changing fiscal landscape across Indian states, with traditionally weaker states like Uttar Pradesh and Madhya Pradesh making remarkable progress. However, fiscal challenges persist for others, especially those heavily reliant on central grants. The report offers a critical reference point for policymakers aiming to strengthen state finances and ensure sustainable economic development.
