This report provides a comprehensive analysis of the fiscal capacity of India’s 30 states and Union Territories (UTs) within the framework of the country’s quasi-federal structure. This system enables both the Central (Union) government and state governments to implement localized developmental activities, fostering economic growth tailored to regional needs. The report focuses on three key components of public finance: Income Composition, Gap Composition, and Budget Composition, offering valuable insights into the fiscal dynamics of Indian states and UTs.

Income Composition

The report begins with an examination of Income Composition, which is vital for understanding the economic foundation of each state. It includes:

1. Gross State Domestic Product (GSDP) at Constant Prices (2011-12): This metric highlights the economic output of each state adjusted for inflation, allowing for a realistic comparison over time. It serves as an indicator of overall economic health and productivity.
2. Agriculture Gross State Value Added (GSVA): The report provides data on the GSVA from agriculture at both constant and current prices, illustrating the sector’s contribution to the state economies. Understanding agricultural output is crucial for assessing food security and rural development.
3. Manufacturing Gross State Value Added (GSVA): Similarly, the GSVA from manufacturing is detailed, showcasing the importance of industrial production and its role in economic diversification. This data informs on the manufacturing capabilities and potential growth areas for each state.
4. Services Gross State Value Added (GSVA): The services sector, a significant driver of economic growth in many states, is analyzed at both constant and current prices. This section emphasizes the rising importance of services in the overall economic framework of the states.

Gap Composition

The report further delves into Gap Composition, which provides insights into fiscal sustainability and financial health:

1. Fiscal Deficit: This metric indicates the extent to which a state’s total expenditure exceeds its total revenue, providing a clear picture of fiscal management and potential long-term sustainability issues.
2. Revenue Deficit: Analyzing the revenue deficit allows for an understanding of the gap between revenue receipts and expenditure, highlighting the need for improving revenue generation.
3. Primary Deficit: This figure, which excludes interest payments, offers insights into the states’ fiscal health by showing the balance between current revenue and expenditure. A primary surplus indicates sound fiscal management.
4. Consumer Price Index (CPI-General): The CPI serves as a measure of inflation, reflecting changes in the cost of living. Understanding CPI trends is crucial for assessing the economic environment and its impact on fiscal planning.

Budget Composition

Lastly, the report examines Budget Composition, detailing the various revenue and expenditure streams critical for effective fiscal management:

1. Own Tax Revenue: This component assesses the states’ ability to generate income through taxes, reflecting the effectiveness of tax policies and administration.
2. Own Non-Tax Revenue: Non-tax revenues, including fees and fines, are analyzed to provide a complete picture of states’ revenue-generating capabilities beyond taxation.
3. Capital Expenditure: Investment in infrastructure and long-term projects is crucial for sustained economic growth. This section evaluates the level of capital expenditure in each state, indicating priorities for development.
4. Social Sector Expenditure: This metric highlights spending on health, education, and welfare, showcasing the commitment of states to social development and human capital investment.

In summary, this report serves as a vital resource for policymakers, researchers, and investors, providing an in-depth analysis of the fiscal capacity of India’s states and UTs. By examining income composition, fiscal gaps, and budget allocations, the report illuminates the financial health and developmental priorities of each region. Understanding these dynamics is essential for fostering effective Centre-State relationships and ensuring sustainable economic growth across India.