States' Aggregate Expenditure Rose By 131 pc In 10 Yrs: CAG Report

New Delhi: States’ aggregate expenditure rose sharply by 131 per cent between 2015-16 and 2024-25, keeping pace with economic growth, as they focused on welfare and development activities, a report released by Comptroller and Auditor General of India (CAG) K Sanjay Murthy said on Tuesday.

As per the report, revenue expenditure continued to dominate budgets, averaging over 83 per cent of total spending, while capital expenditure increased in absolute terms but remained 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 report.

The report further said that committed expenditure and subsidies consistently absorbed more than half of revenue expenditure, reaching 53.31 per cent in 2024-25, with subsidies growing particularly rapidly. At the disaggregate level, states’ expenditure remained concentrated in 8 object categories, including 3 types of grants-in-aid, salaries, pensions, interest payments, subsidies and major works, accounting for nearly 78.46 per cent of total spending and about 12.38 per cent of combined gross state domestic product (GSDP). “This reflects the continued dominance of committed and obligatory expenditures in state budgets,” it said.

Total expenditure of the states increased from Rs 22.18 lakh crore in FY 2015-16 to Rs 51.20 lakh crore in 2024-25, an increase of 131 per cent. “Over the period 2015-16 to 2024-25, despite a substantial increase in total expenditure, the expenditure structure remained largely unchanged, with salaries, pensions, interest payments, subsidies and grants together absorbing a substantial share, indicating fiscal rigidity,” the report said.