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Problem

In Some States, Salaries, Pensions and Interest Leave Little Room to Build Anything

  • State

In a specific group of states, salaries, pensions and interest consume so much of the revenue that little is left to build anything with. This is a state-level finding and is not claimed as a national one. PRS Legislative Research estimates that states will spend about half their revenue receipts on salary, pension and interest in 2025-26, with Assam, Himachal Pradesh, Kerala, Punjab and Tamil Nadu above 60 per cent. The Comptroller and Auditor General measures the same idea against revenue expenditure instead — a different denominator — and puts the national average at 43.49 per cent, with Nagaland highest at 74 per cent. NITI Aayog's Fiscal Health Index reaches the same place by a third route, recording committed expenditure of roughly 50-60 per cent of revenue receipts in the most stressed states. The three series are kept separate here rather than blended into a range that none of them supports.

This is the most specific entry on this branch of the catalogue. The evidence behind it is below.

Who is responsible

  • State Finance Departments · State GovernmentExpenditure composition is decided by each state; there is no uniform Union intervention on committed expenditure.
  • Comptroller and Auditor General of India · Constitutional or statutory institutionAudits and publishes state finances, including committed expenditure and FRBM compliance.
  • NITI Aayog · Union GovernmentPublishes the Fiscal Health Index, the third of the three committed-expenditure series cited here.

Evidence and sources

  • NITI Aayog, Fiscal Health Index 2026 (for 2023-24) · Government documentPage 17 of the Index records West Bengal, Kerala, Andhra Pradesh and Punjab carrying debt of roughly 35-45 per cent of gross state domestic product, committed expenditure of about 50-60 per cent of revenue receipts and interest payments above 15-20 per cent, with FRBM norms often breached. Page 16 recommends curbing committed expenditure and tighter control of off-budget borrowing.
  • PRS Legislative Research, State of State Finances (October 2025) · Research paper or studyUsing Reserve Bank state-budget data, PRS estimates that states will spend about 50 per cent of revenue receipts on salary, pension and interest in 2025-26 on budget estimates, with Assam, Himachal Pradesh, Kerala, Punjab and Tamil Nadu above 60 per cent, and Jharkhand, Bihar, Chhattisgarh, Manipur and Madhya Pradesh below the average. The named outliers are firm; any single national percentage is less so, and no permanent public link to this edition was available.
  • Comptroller and Auditor General of India, decadal State Finances publication (2013-14 to 2022-23) · Government documentThe CAG measures committed expenditure against revenue expenditure — a different denominator from the PRS series — giving a national average of 43.49 per cent, with Nagaland highest at 74 per cent, Himachal Pradesh 66.81, Kerala 62.89, Uttarakhand 58.94 and Punjab 57.81 per cent. In 2022-23, five states spent more than 15 per cent of total expenditure on pensions alone. These figures are taken from reporting of the publication rather than from the CAG document itself, and the two series should not be blended into a single range.

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