Conclusion – State Budget Analysis of 2023-24
In this comprehensive analysis of state budgets in India, we explore the financial landscape of
both major and minor states, shedding light on key aspects such as revenue projections,
expenditure plans, deficits, and the states' approach to fiscal management.
This paper focuses on the budgets of 18 major & 9 minor states. It reveals that the aggregate
budget estimates for major states anticipate a growth rate of 10.83% in Total Revenue Receipts
(TRR) for the upcoming fiscal year (2023-24BE). However, this growth rate is 9% lower than the
revised estimate of the previous year (2022-23). This decline is attributed to factors such as a
decrease in the growth rate of Own Tax Revenue (OTR) by 3% and a considerable reduction in
grants-in-aids from the Union government.
To adjust to the lower revenue growth, the major states have prudently set lower growth rates
for expenditures in the upcoming fiscal year. The projected figures indicate a revenue deficit of
Rs. 0.65 trillion and a fiscal deficit of Rs. 8.45 trillion for the aggregate major states in 2023-
24BE. Despite these challenges, the states demonstrate their commitment to prudential fiscal
management by reducing the growth rates of deficits compared to the previous year.
It highlights that major states expect a decline in revenue due to decreased growth rates in
grants-in-aid and the share of taxes from the central government in the year 2023-24. Similarly,
minor states also anticipate a decrease in grants-in-aid and their share in union taxes.
Consequently, both major and minor states have set targets for revenue and capital expenditure
to control their fiscal deficits.
This paper emphasize the significance of managing the fiscal deficit at around 3 percent of State
Nominal GDP for both major and minor states. They also indicate a shift in the use of state
government loans, favoring the financing of capital expenditure over revenue expenditure. This
strategic decision aligns with prudent fiscal policy.
Furthermore, the paper discusses the volatility in revenue forecasting caused by variations in
the timing of revenue collection and transfers from the Union government. However, the
difference between revised and provisional estimates has narrowed down to almost zero in
2022-23, owing to improved distribution and timeliness of taxes.
Despite the challenges posed by the COVID-19 pandemic, major states are projected to recover
from the revenue loss in 2023-24 and achieve targets similar to the pre-pandemic period. The
introduction of Goods and Services Tax (GST) and the role played by GST Compensation have
been instrumental in offsetting revenue loss. However, it is noteworthy that the overall fiscal
deficit is expected to increase by 22 percentage points of aggregate GSDP among major states,
with minor states facing similar concerns about high fiscal deficits.
Both major and minor states have demonstrated accurate estimation of revenue growth decline
for the upcoming year. They have accordingly set targets for revenue and capital expenditure,
aiming to manage fiscal deficits within a reasonable range.
In summary, these articles provide a comprehensive analysis of state budgets, encompassing
revenue projections, expenditure plans, deficits, and the states' approach to fiscal management.
The papers shed light on the financial landscape of major and minor states, emphasizing the
need for prudent fiscal policies, managing deficits, and addressing challenges to ensure
sustainable economic growth.
