India state fiscal health: Delhi, Arunachal mark extremes of debt burden

Delhi had the lowest debt burden among states and Union Territories for which comparable data was available in 2024-25 Budget Estimates (BE), at 1.3 per cent of GSDP, according to Business Standard’s India State Fiscal Health Tracker.

It was followed by Odisha (16.3 per cent), Gujarat (17.9 per cent), Maharashtra (19.0 per cent) and Uttarakhand (24.2 per cent).

Arunachal Pradesh had the highest debt burden at 57.0 per cent of GSDP, followed by Punjab (46.6 per cent), Himachal Pradesh (45.2 per cent), West Bengal (39.3 per cent) and Meghalaya (38.8 per cent).

According to the Reserve Bank of India’s 2025 Handbook of Statistics on Indian States, these figures are based on Budget Estimates for financial year 2024-25. The tracker compares states and UTs across eight separate fiscal indicators.

What does debt burden tell us?

Debt burden shows how large a state’s outstanding liabilities are compared with the size of its economy. It is expressed as a percentage of Gross State Domestic Product (GSDP), the total value of goods and services produced in the state.

Looking only at the amount of debt in rupee terms can be misleading because larger states generally have bigger economies and, therefore, may also have larger liabilities. Expressing liabilities as a share of GSDP gives a clearer picture of the debt burden relative to each state’s economic size.

The formula is:

Debt burden = Outstanding liabilities ÷ GSDP × 100

In simple terms, if a state’s outstanding liabilities are ₹30 and its GSDP is ₹100, its debt burden is 30 per cent. This means the state’s outstanding liabilities are equal to 30 per cent of the size of its economy.

A higher debt burden generally means greater accumulated debt pressure, while a lower ratio suggests relatively lower debt compared with the size of the economy. A high debt burden can also leave a state with less room to spend on other priorities as more resources may be needed to service its debt.

However, the ratio should not be viewed in isolation, since factors such as economic growth, revenue collection and interest costs also affect a state’s ability to manage its debt.

Which states are in the Top 5?

Delhi occupied the top position with outstanding liabilities equivalent to just 1.3 per cent of GSDP, followed by Odisha at 16.3 per cent. The gap between Delhi and second-ranked Odisha was particularly wide at 15 percentage points. The five states and UTs in this group all had debt burdens below 25 per cent of GSDP.

Which states are in the Bottom 5?

Arunachal Pradesh recorded the highest outstanding liabilities at 57.0 per cent of GSDP, followed by Punjab at 46.6 per cent and Himachal Pradesh at 45.2 per cent. West Bengal and Meghalaya followed at 39.3 per cent and 38.8 per cent, respectively.

The gap between the two ends of the ranking is substantial: Delhi’s ratio stood at 1.3 per cent compared with 57.0 per cent for Arunachal Pradesh, a difference of 55.7 percentage points.

How should the ranking be read?

The ranking measures only debt burden 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 figures are also 2024-25 Budget Estimates rather than final accounts. Budget Estimates represent what governments expected to collect, spend or borrow when their budgets were prepared and can differ from the eventual outcome. The tracker excludes observations where comparable data required for calculating the ratio is unavailable.

Explore the full tracker

Explore Business Standard’s India State Fiscal Health Tracker to see how your state performs across fiscal deficit, revenue deficit, debt, guarantees, interest and pension burden, own revenue and capital outlay, and compare its performance over time.

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