states-salary-pension-interest-bills-rise-2-5-fold-in-10-years

States have witnessed a sharp rise in committed expenditure on salaries, pensions, and interest payments, reaching Rs 15.63 lakh crore in 2022-23, nearly 2.5 times the Rs 6.26 lakh crore recorded a decade ago, according to a Comptroller and Auditor General (CAG) report on state finances.

 

The report, State Finances 2022-23, provides an overview of fiscal data and trends across 28 states over the ten-year period from 2013-14. It highlights that a significant portion of states’ revenue expenditure remains committed or tied up, limiting flexibility in policy and development spending.

 

“Over the period 2013-14 to 2022-23, revenue expenditure increased by 2.66 times, committed expenditure increased by 2.49 times, and subsidy increased by 3.21 times,” the report noted.

 

In FY 202s2-23, revenue expenditure across states amounted to Rs 35.95 lakh crore, of which Rs 15.63 lakh crore was committed expenditure, Rs 3.09 lakh crore was spent on subsidies, and Rs 11.26 lakh crore on grants-in-aid. Together, these three components accounted for over 83 per cent of total revenue expenditure.

Also read: Jagan Reddy slams CM Naidu over state finances

Salaries continued to constitute the largest share of committed expenditure, followed by pensionary payments and interest servicing. However, in nine states, Andhra Pradesh, Gujarat, Haryana, Karnataka, Punjab, Rajasthan, Tamil Nadu, Telangana, and West Bengal, interest payments exceeded pensions, reflecting higher debt servicing obligations.

 

The report also examined fiscal targets. Seventeen states aimed for a revenue surplus, six targeted zero revenue deficit, and five planned for revenue deficit in 2022-23. Of the states targeting surplus, Assam, Bihar, Himachal Pradesh, Meghalaya, and Rajasthan ended up in deficit, while the remaining 12 achieved their goals.

 

Among the five states targeting revenue deficit, Karnataka moved to a surplus, Maharashtra remained within its 1.42 per cent GSDP target, while Andhra Pradesh, Haryana, and Punjab breached the limits. Finance Commission revenue deficit grants were provided to nine of the 12 states ending the year in deficit, including Andhra Pradesh, Assam, Himachal Pradesh, Kerala, Meghalaya, Punjab, Rajasthan, Tamil Nadu, and West Bengal.