Addressing a workshop on off the budget borrowing, he asked states to gradually phase out such liabilities, pegged at ₹90.51 lakh crore as on March 31.
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He called for improvements in identification, verification and reporting of such liabilities as concerns mount over the true scale of subnational liabilities and fiscal transparency.
Murthy said states require “practical and workable approaches” to improve disclosure standards, noting that better data would support informed fiscal decision-making by governments and policymakers. He also released a report on “State Finances 2024-25”.
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Fiscal StressStates’ aggregate expenditure rose sharply by 131% between 2015-16 and 2024-25, as per a CAG report released by Murthy.
Revenue expenditure continued to dominate budgets, averaging over 83%of total spending, while capital expenditure increased in absolute terms, it was a relatively smaller share. “Social and economic services together accounted for about two-thirds of total expenditure, reflecting states’ focus on welfare and development,” said the CAG’s Publication on State Finances 2024-25.
States’ combined liabilities rose to ₹90.51 lakh crore, out of which public debt stood at ₹75.52 lakh crore. Total liabilities were 27.89% of combined GSDP, with 13 states exceeding the Finance Commission’s indicative debt threshold, the CAG said.
Six states had public debt liability of less than 20% of their GSDP, while the remaining 12 states had public debt liability between 20- 30% of their respective GSDP in FY 2024-25. The report showed that states spent ₹51.20 lakh crore during the year, a growth of 131% in the last one decade and was 15.78% of gross state domestic product, the report said.