UP, Gujarat, Jharkhand, 10 other states record revenue surplus in FY25: CAG report

According to the CAG's State Finances 2024-25 report, thirteen states recorded revenue surpluses while fifteen states remained in revenue deficit during the ...

What Happened

According to the CAG's State Finances 2024-25 report, thirteen states recorded revenue surpluses while fifteen states remained in revenue deficit during the fiscal year 2024-25.
Uttar Pradesh led the revenue surplus states with Rs 37,000 crore, followed by Gujarat (Rs 19,856 crore), Odisha (Rs 15,560 crore), and Jharkhand (Rs 13,920 crore); other surplus states included Manipur and nine others.
Revenue-deficit states included Karnataka, Maharashtra, West Bengal, Haryana, Himachal Pradesh, Assam, Bihar, Chhattisgarh, Mizoram, Telangana and others — several of which had targeted surpluses at the time of budget presentation.
The aggregate revenue deficit of the 15 deficit states (before netting off surpluses) stood at Rs 3,46,385 crore, or 1.5 per cent of their combined GSDP; the net revenue deficit across all states combined worked out to Rs 2,19,041 crore, or 0.68 per cent of aggregate GSDP.

Static Topic Bridges

Revenue Deficit and Revenue Surplus: What They Mean

A state is in revenue surplus when its revenue receipts exceed revenue expenditure — that is, current income is more than enough to cover day-to-day spending. Conversely, a revenue deficit means the state must borrow even to fund recurring expenses such as salaries and interest payments, which implies that borrowings are being used for consumption rather than capital creation. Revenue deficit is therefore considered the more structurally damaging imbalance. When states have revenue surpluses, they can in principle allocate a portion of borrowed funds to capital expenditure, building durable assets.

Revenue receipts = Own Tax Revenue + Own Non-Tax Revenue + Central tax devolution + Grants-in-Aid from Centre
Revenue expenditure = Wages, salaries, pensions, interest payments, subsidies, maintenance grants
Revenue deficit = Revenue expenditure − Revenue receipts (positive value = deficit)
Revenue surplus = Revenue receipts − Revenue expenditure (positive value = surplus)
Finance Commission grants called "Revenue Deficit Grants" are available to states that have certified structural revenue deficits — in FY25, Himachal Pradesh, Mizoram, Punjab and West Bengal received such grants

Connection to this news: The split between surplus and deficit states illustrates divergent fiscal trajectories even within a single year and the same national policy environment.

Finance Commission Revenue Deficit Grants

The Finance Commission, constituted under Article 280 of the Constitution, is empowered to recommend grants-in-aid to states. One specific category is Post-Devolution Revenue Deficit (PDRD) grants, paid to states whose own revenues plus share of central taxes still leave them with an assessed revenue gap. The 15th Finance Commission recommended such grants for eleven states over the 2021-26 award period. These grants are meant to be a degressive safety net — reducing each year to give recipient states an incentive to improve their own revenue position.

Constitutional basis: Article 280(3)(b) — grants-in-aid to states in need of assistance
15th Finance Commission covered 2021-26; successor 16th Finance Commission is now at work
States receiving PDRD grants in FY25 from the CAG report: Himachal Pradesh, Mizoram, Punjab, West Bengal
Grants are in addition to tax devolution (the 41% share of Centre's divisible pool)

Connection to this news: That several PDRD grant recipients still ran revenue deficits in FY25 indicates the grants partially but not fully offset structural revenue shortfalls.

Target vs. Achievement in State Budgets

A recurring feature of Indian state finances is the divergence between budgeted targets and actual outcomes. In FY25, 18 states had targeted revenue surpluses in their budgets; only 9 achieved them. The nine states that targeted surpluses but ended in deficit included Assam, Bihar, Chhattisgarh, Haryana, Himachal Pradesh, Karnataka, Maharashtra, Mizoram and Telangana. Separately, seven states targeted zero revenue deficit; of these, Goa, Jharkhand, Tripura and Uttar Pradesh succeeded, while Punjab, Rajasthan and Tamil Nadu missed the target. This pattern of systematic overestimation of revenue and underestimation of expenditure is a well-documented feature of Indian public finance.

18 states targeted revenue surplus; only 9 achieved it
7 states targeted zero revenue deficit; 4 achieved it, 3 did not
Significant slippages in large states (Karnataka, Maharashtra) widen the aggregate deficit picture meaningfully
FRBM-compliant budgeting requires states to show a credible path to eliminating revenue deficits

Connection to this news: The target-outcome gap is itself a governance indicator — persistent slippage erodes the credibility of FRBM commitments and complicates borrowing limit assessments.

Key Facts & Data

Revenue surplus states (13): Uttar Pradesh, Gujarat, Jharkhand, Manipur, Odisha and 8 others
Revenue deficit states (15): Includes Karnataka, Maharashtra, West Bengal, Haryana, Himachal Pradesh, Assam, Bihar, Chhattisgarh, Mizoram, Telangana
Highest revenue surplus: Uttar Pradesh at Rs 37,000 crore
Gujarat: Rs 19,856 crore surplus; Odisha: Rs 15,560 crore; Jharkhand: Rs 13,920 crore
Aggregate revenue deficit of 15 deficit states: Rs 3,46,385 crore (1.5% of their combined GSDP)
Net aggregate revenue deficit (all 28 states combined): Rs 2,19,041 crore (0.68% of combined GSDP)
States receiving Finance Commission revenue deficit grants in FY25: Himachal Pradesh, Mizoram, Punjab, West Bengal
Of 18 states targeting revenue surplus: only 9 achieved it
Of 7 states targeting zero revenue deficit: 4 achieved it (Goa, Jharkhand, Tripura, UP); 3 did not (Punjab, Rajasthan, Tamil Nadu)
Combined state expenditure: Rs 51.20 lakh crore (15.78% of combined GSDP)
States' total combined revenue receipts: Rs 40.52 lakh crore in FY25