India state fiscal health: Arunachal logs highest revenue surplus in FY25 | Economy & Policy News

Arunachal Pradesh recorded the largest revenue surplus as a share of Gross State Domestic Product (GSDP) among the 25 states and Union Territories for which comparable data was available for the financial year 2024-25 (FY25), based on the Budget Estimates (BE).

The tracker is based on the Reserve Bank of India’s 2025 Handbook of Statistics on Indian States and compares states and UTs across eight separate indicators.

What does revenue deficit tell us?

A state’s revenue deficit occurs when its revenue expenditure exceeds its revenue receipts. A positive value means revenue receipts are insufficient to cover revenue expenditure. A negative value indicates a revenue surplus, meaning revenue receipts exceed revenue expenditure.

A lower revenue deficit as a share of GSDP generally indicates a healthier position on this metric. A negative ratio indicates that the state is running a revenue surplus, while a higher positive ratio indicates a larger revenue deficit relative to the size of the state economy. However, the indicator should not be read in isolation, as it captures only one aspect of a state’s fiscal position.

How is revenue deficit calculated?

The tracker expresses revenue deficit as a share of GSDP at current prices. This allows the size of a state’s revenue deficit or surplus to be assessed relative to its economy, making comparisons across states more meaningful.

Formula: (Revenue Deficit ÷ GSDP at current prices) × 100

Dividing by GSDP shows the size of the revenue deficit or surplus relative to the state economy. This avoids treating a large rupee deficit in a large state as automatically worse than a smaller deficit in a small state.

Arunachal Pradesh occupied the top position with a revenue deficit ratio of -12.1 per cent of GSDP, indicating a revenue surplus. Meghalaya followed at -6.5 per cent, while Jammu and Kashmir and Jharkhand recorded ratios of -6.2 per cent and -3.7 per cent, respectively. Odisha rounded out the top five at -3.1 per cent. All five states recorded revenue surpluses in the FY25 Budget Estimates.

Punjab had the highest revenue deficit relative to GSDP among the 25 states and UTs at 2.8 per cent. This indicates that Punjab’s revenue expenditure was higher than its revenue receipts. Kerala and Andhra Pradesh followed at 2.2 per cent each, while Himachal Pradesh recorded 1.9 per cent and West Bengal 1.8 per cent. All five states recorded revenue deficits in the FY25 Budget Estimates.

How should the ranking be read?

The ranking measures only revenue deficit as a share of GSDP and should not be interpreted as an overall ranking of state finances. A state can perform strongly on one fiscal indicator and poorly on another.

The tracker excludes states and UTs for which FY25 data was not available. These are Andaman and Nicobar Islands, Chandigarh, Dadra and Nagar Haveli and Daman and Diu, Goa, Gujarat, Ladakh, Lakshadweep, Manipur, Mizoram, Nagaland, and Sikkim.