State Finances Report 2022-23 by Comptroller and Auditor General

Overview

State Finances Report 2022-23 by Comptroller and Auditor General: The Comptroller and Auditor General (CAG) released the State Finances Report 2022-23, the first comprehensive document covering fiscal data of all 28 states over a decade from 2013-14 to 2022-23. The report highlights trends in public debt, fiscal deficit, revenue generation, and expenditure patterns, providing insights into the fiscal health of Indian states.

Static GK fact: The CAG of India is a constitutional authority under Article 148, responsible for auditing government accounts at both Union and State levels.

State Debt Situation

The report shows that states’ total debt in 2022-23 stood at 22.17% of national GDP. This level surpasses the FRBM Act (2003) target, which mandates state government debt to be 20% of GDP by 2024-25.

The Debt-to-GSDP ratio was highest in Punjab (40.35%), followed by Nagaland (37.15%) and West Bengal (33.70%). These figures reflect the rising fiscal stress faced by several states.

Static GK Tip: The FRBM Act, 2003 was introduced to institutionalize fiscal discipline and reduce deficits at both Union and State levels.

Fiscal Deficit Patterns

The report revealed that all 28 states were in fiscal deficit during 2022-23. The deficit ranged from a low of 0.76% of GSDP in Gujarat to a high of 6.46% in Himachal Pradesh.

The FRBM benchmark required states to contain fiscal deficit within 3.5% of GSDP for FY 2022-23, but several states overshot this limit, pointing to structural imbalances.

Revenue Gaps among States

The data highlighted stark differences in States’ Own Tax Revenue (SOTR). While Haryana’s SOTR share was 70%, Arunachal Pradesh recorded only 9%, indicating varying dependence on central transfers and GST revenues.

Such gaps underline unequal fiscal capacities, where economically stronger states mobilize more internal revenue compared to resource-constrained ones.

Reasons for Rising Public Debt

Subsidy Burden

Many states witnessed an increase in subsidy expenditure, driven by farm loan waivers, free or subsidized electricity for agriculture, cash transfers, and welfare schemes for youth and women.

High Committed Expenditure

A major factor is committed expenditure, including salaries, pensions, and interest payments. Between 2013-14 and 2022-23, its share stayed above 42% of revenue expenditure and 6% of GSDP, restricting fiscal flexibility.

Limited Revenue Mobilisation

States remain dependent on GST collections and central transfers. Weak tax mobilization at the state level has aggravated debt accumulation.

Static GK fact: The Goods and Services Tax (GST) was introduced in 2017, subsuming multiple indirect taxes and altering the revenue structure of states.

Way Forward

To achieve fiscal sustainability, states need to improve tax administration, rationalize subsidies, and control non-developmental expenditure. Adhering to FRBM targets will be crucial to ensure long-term economic stability and prevent unsustainable debt burdens.

Static Usthadian Current Affairs Table

State Finances Report 2022-23 by Comptroller and Auditor General: