NEW DELHI: The salary bills of states have ballooned 2.5 times in the 10 years to 2022-23, reaching Rs 16.6 lakh crore, while subsidy bills have more than trebled to Rs 3.09 lakh crore, according to a report published by the Comptroller and Auditor General (CAG) of India. The State Finances Publication 2025 further shows that public debt raised by states grew 3.4 times over the same period to Rs 59.6 lakh crore.
In FY 2022-23, states’ committed expenditure on salaries, interest payments, and pensions constituted a significant portion of their finances, accounting for about 43.49% of total revenue expenditure. Salaries formed the largest component of this spending.
Expenditure on salaries, pensions, and interest payments as a percentage of revenue expenditure varied widely—from as high as 74% in Nagaland to 32% in Maharashtra. In 2022-23, 15 states reported committed expenditure exceeding 50% of their revenue expenditure, seven states between 40–50%, and six states below 40%.
Among southern states, committed expenditure accounted for 63% of Kerala’s revenue expenditure, 51% in Tamil Nadu, 42% in Andhra Pradesh, 41% in Telangana, and 33% in Karnataka.
Subsidy spending accounted for 8.61% of states’ revenue expenditure—defined as spending on day-to-day government operations and services that do not create assets or increase existing assets.
In 2022-23, four states—Punjab, Gujarat, Andhra Pradesh, and Rajasthan—spent more than 10% of their total expenditure on subsidies, with Punjab the highest at 17%. By contrast, in 10 states (Sikkim, Nagaland, Meghalaya, Uttarakhand, Manipur, Tripura, Mizoram, Kerala, Assam, and Goa), subsidies were below 2% of total expenditure. Arunachal Pradesh reported no subsidy expenditure.
The report also shows that committed expenditure and subsidies together exceeded states’ own tax revenue—at 102% in 2013-14 and 134% in 2020-21. States’ major revenue sources include own tax and non-tax revenues, grants-in-aid, and their share of Union taxes. Between 2013-14 and 2022-23, states’ average share in Union taxes was about 27% of total revenue receipts. In FY 2022-23, this figure remained unchanged at 27%.
In 2022-23, 10 states together received 72% of the states’ share in Union taxes and duties. Uttar Pradesh (17.89%), Bihar (10.07%), Madhya Pradesh (7.86%), West Bengal (7.53%), and Maharashtra (6.33%) together accounted for 50% of devolved taxes. Among southern states, Tamil Nadu received 4.08%, Andhra Pradesh 4.02%, Karnataka 3.65%, Telangana 2.07%, and Kerala 1.93%.
As of March 31, 2023, the total public debt for all 28 states stood at Rs 59.6 lakh crore, about 23% of their combined GSDP.