Capital outlay of top 15 states expected to surge by 18 pc in FY26
The capital outlay of the country’s top 15 states for FY26 is projected to rebound by 18 per cent (year-on-year) to Rs 7.2 lakh crore, driven by a post-election boost in capital spending, execution of infrastructure projects and continued allocation of Rs 1.50 lakh crore to states through interest-free capex loans in the Union Budget 2025-26, according to a report released on Wednesday.
The report by CareEdge Ratings analysed the finances of the top 15 states, which account for 87 per cent of India’s Gross State Domestic Product (GSDP) for FY24, to provide insights on aggregate state finances.
These states were Andhra Pradesh, Bihar, Gujarat, Haryana, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Odisha, Punjab, Rajasthan, Tamil Nadu, Telangana, Uttar Pradesh and West Bengal.
A healthy 11-12 per cent growth in tax devolution from the Centre and own tax revenue is expected to drive an overall revenue receipts growth of approximately 9 per cent in FY25, the report stated.
The report forecast that overall revenue receipts will grow by 10-11 per cent year-on-year in FY26, bolstered by the continued healthy collection of State’s own tax revenue and tax devolution from the Centre.
According to the study of 15 state finances, it estimated that outperformers and high performers account for 63 per cent of the total debt of Rs 86 lakh crore as of March 31, 2024, while moderate performers hold the remaining 37 per cent of the total debt.
Prasanna Krishnana, associate director, CareEdge Ratings said, “The financial outlook for India's top 15 states appears cautiously optimistic. Although revenue receipts are set to rise steadily, the states encounter difficulties in achieving their ambitious budgetary targets”.
Despite challenges, the fiscal deficit is projected to remain below 3 per cent for FY26. The rising debt levels call for a balanced approach to borrowing and spending, he added.
