All 28 Indian states reported fiscal deficits during the 2024-25 fiscal year, according to a report from the Comptroller and Auditor General (CAG) [3].
This widespread deficit spending signals deepening fiscal stress across the country's regional governments. While some states managed to limit their borrowing, the overall trend indicates a struggle to balance expenditures against revenues.
Ten states managed to keep their fiscal deficits below the recommended 3% ceiling [1]. Among those that maintained this discipline were Goa, Gujarat, Uttar Pradesh, and Maharashtra [5]. These figures highlight a divide in how different state administrations approach fiscal management and debt control.
Despite the deficit totals, 13 states reported a revenue surplus in 2024-25 [2]. A revenue surplus occurs when a government's recurring income exceeds its recurring expenditures, though this does not eliminate the overall fiscal deficit when capital spending is included.
The broader financial picture shows a significant increase in debt. Combined liabilities for the states rose to Rs 90.51 lakh crore as of March 31, 2025 [4]. This mounting debt load may limit the ability of states to fund future infrastructure projects or social programs without further borrowing.
The CAG report serves as a benchmark to assess how responsibly states are managing their finances against established fiscal guidelines [3]. By comparing those that stayed within the 3% limit against those that exceeded it, the report provides a map of regional financial stability.
“All 28 Indian states reported fiscal deficits during the 2024-25 fiscal year”
The fact that every state posted a deficit suggests a systemic reliance on borrowing to fund governance. While the 3% deficit ceiling is intended to ensure long-term sustainability, the rise in combined liabilities to over Rs 90 lakh crore indicates that even 'disciplined' states are operating within a high-debt environment. This could lead to increased pressure on the central government for bailouts or force states to implement austerity measures.
