The state of state budgets

With states expected to push the reforms agenda, a mechanism is needed for assessing their budget data

- AK BHATTACHARYA

Several states have by now presented their annual budgets for 2024-25. Unsurprisingly, many of them have made rosy projections and tall promises. Only time will tell if these announcements result in actual performance on the ground, either by fulfilling the promises made or through effective implementation of the policies outlined.

But going beyond the question of implementation, these budgets serve another purpose. They bring to light the actual and revised numbers that underlie those budgets presented in the last three years. The objective of this article is to use these budgets to assess how these states have done in the post-Covid period from 2021-22 to 2023-24, for which reliable numbers are now available. And perhaps compare that assessment with the trends seen in the Centre's budgets in the same years.

For obvious reasons, the numbers under study are actuals for the first two years (2021-22 and 2022-23) and revised estimates for the current financial year. A quick look at these budget numbers for about 20 large states (excluding Andhra Pradesh and Odisha, which are going into their respective Assembly elections in the coming weeks) offers many takeaways for those tracking India's public finance.

On the question of these states' intent on fiscal consolidation, the picture is mixed. Quite a few states have failed to fulfil their fiscal deficit targets they had set for themselves at the time of presenting their budgets. In 202324, for instance, as many as seven states have produced a revised estimate of their fiscal deficit that is wider than what they had projected in the budget estimate. Assam, Bihar, Chhattisgarh, Himachal Pradesh, Tamil Nadu, Maharashtra and Rajasthan are guilty of not adhering to their own target, while Karnataka and Uttar Pradesh have barely managed to stay close to the number they had indicated.