Before the Goods and Services Tax Council met earlier this month to finalise the new rates and transfer hundreds of products from higher to lower slabs, many experts expected verbal fireworks before the real firecrackers on Diwali. The prospect was that the larger and more voluble states would take on Union Finance Minister Nirmala Sitharaman regarding fears of a fall in revenues. As taxes come crashing down, the Centre’s collections would plummet, and so would the share of states from the central booty. Shockingly, only murmurs and whispers were heard. Instead of two days, the council finished its meeting in a day. The FM claimed that there was complete consensus.
So the hype was created by the experts. The fact remains that states—including some of the larger ones—do not depend too much on the share of central GST collections. It is one of the several myths that were blasted by a first-of-its-kind decadal report—covering 2013-14 to 2022-23—on state finances that was recently released by the Comptroller and Auditor General (CAG). “The 10-year comparative data… charts out a trend with respect to the fiscal parameters state-wise, and will provide useful insights to policy-makers and other stakeholders,” wrote CAG K Sanjay Murthy in the foreword. As the report does so, some misgivings related to state revenues are cast in a fresh light.
Of the total revenue receipts of 28 states in 2022-23, just over a fourth (27 percent) came from the Centre’s taxes. Over the past decade, the annual figure has never crossed 30 percent. Only 10 states gobbled up more than 70 percent of the amount the Centre shared in 2022- 23. Uttar Pradesh was the largest beneficiary, receiving almost 18 percent of the total, followed by Bihar (just over 10 percent), and Madhya Pradesh (just under 8 percent). The decadal pattern was similar—the same 10 states accounted for 73 percent of the Centre’s devolution.
Indeed, the bulk of states’ revenues are generated by themselves. In economic jargon, they include states’ own-tax revenues (SOTR) and state non-tax revenues (SNTR). Ironically, the former includes a part of the overall GST, or state GST (generally 50 percent), which goes directly into the states’ kitty, apart from value-added tax, sales tax, excise duties on liquor, petroleum products, and electricity (all three excluded from GST), vehicular taxes, land revenue, stamp duties, and registration fees. SNTR includes royalties from minerals and mining, interest and dividends from profitable state-owned units, and user charges and profits from state enterprises involved in supplying transport, power, drinking water, and other amenities.
While 10 of the smaller states—including the seven Northeastern sisters—accounted for about 3 percent of the combined revenue receipts in 2022- 23, the remaining 18 gorged on the remaining amount. For the top seven in the latter category, the annual own-taxes comprised 60-70 percent of their revenue receipts. The top contender was, surprisingly, Haryana at 71 percent; another shocker was Telangana in the third position with 67 percent. The others included the high-consumption states of Maharashtra (68 percent), Karnataka and Gujarat (63 percent each), and Tamil Nadu (62 percent). In comparison, the share of the seven sisters was under 20 percent each.
However, the buoyancy of the combined SOTR over the decade, which is calculated as the ratio between the growth of own-taxes vis-à-vis the state’s GDP growth, went up from below 1 in 2014-15 to 1.4 in 2022-23. As expected, the figure dropped to 0.3 in 2019-20 during the Covid year, but it remained over 1, considered a healthy position, in only four of the remaining seven years. In percentage terms, the annual growth rate of overall SOTRs fluctuated wildly between -3.7 percent (2020-21) and over 25 percent the next year (2021-22), probably due to the low-base effect. The figure remained over 10 percent in four of the years under the study.
In comparison, the non-tax revenues were crucial for the mineral-rich, smaller states and some newer states formed in this century. In only eight cases was it more than 10 percent of the annual revenue receipts. For Odisha (over 28 percent), Goa (over 22 percent), and Chhattisgarh and Jharkhand (around 16 percent each), these revenues were crucial. Royalties from minerals sustained Odisha, and comprised nearly 90 percent of its SNTR in 2022-23. Similarly, Rajasthan earned almost 60 percent of its SNTR from royalties related to petroleum, minerals, and metallurgy. Both the states also earned significant amounts, over ₹2,000 crore each, from interest and dividends.
Almost 80 percent of Kerala’s nontax revenues during 2022-23 came from—guess what?—lotteries. This explains why the state agitated vociferously against the GST Council’s decision to dump the tax on lotteries in the highest ‘sin’ category and raise the levy from 28 percent to 40 percent. What’s also remarkable is that half of Telangana’s SNTR in 2022-23, or nearly ₹10,000 crore came from the sale of land. In August 2025, the Telangana Housing Board sold more than 15 acres in two deals, and earned more than ₹1,000 crore collectively. There is a plan to hold a major land auction in the future to mop up ₹2,700 crore.
What is laudable is that 16 of the 28 states showed revenue surpluses—revenue receipt minus revenue expenditure—in 2022-23. One of the economically smallest states, Arunachal Pradesh, had the highest surplus. One of the newer states, Jharkhand was second. The seemingly-laggard Odisha was third. Worryingly, Maharashtra, one of the largest and richest states, showed an annual revenue deficit, albeit a minor one of less than 0.5 percent. The shockers were Punjab (30 percent), Haryana (over 19 percent), Rajasthan (over 16 percent), and Tamil Nadu (almost 15 percent). Andhra Pradesh possibly suffered from the formation of Telangana, and had the second-highest deficit of more than 27.5 percent. West Bengal, with a revenue shortfall of nearly 14 percent, was on this negative list, which is not a surprise given the state of its industries.
So a reading of the numbers reveals why there was not much protest over the prospect of the central GST kitty shrinking. Our resourceful states find one way or another to raise significant revenues of their own. The point is which routes are sustainable in the long run. But that’s a different question.
Alam Srinivas | Journalist and author of Storms in the Sea Wind and IPL: An Inside Story, Cricket & Commerce
(Views are personal)