Problem

States That Raise Least of Their Own Revenue Have the Least Room to Act

State

How much a state can raise for itself varies enormously, and the states that can raise least depend most on transfers from the Union. In aggregate, states' own tax revenue is the largest single source of their revenue receipts — 50.13 per cent in 2024-25 according to the Comptroller and Auditor General — so the problem is not a national shortfall but the spread around that average. NITI Aayog's Fiscal Health Index puts own tax revenue at about 6-7 per cent of gross state domestic product in the Himalayan states against about 8 per cent in the major states, with dependence on the Centre running at 60-90 per cent of revenue receipts against 30-50 per cent, which leaves correspondingly little room for states to act on their own priorities. Exact per-state percentages beyond these aggregates are not yet sourced.

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 GovernmentOwn tax effort is a state responsibility.
Comptroller and Auditor General of India · Constitutional or statutory institutionPublishes the aggregate own-tax-revenue share of state revenue receipts.
NITI Aayog · Union GovernmentPublishes the Fiscal Health Index comparing own-revenue capacity across states.

Evidence and sources

Comptroller and Auditor General of India, State Finances 2024-25 · Government documentThe CAG reports states' own tax revenue as the largest single component of revenue receipts nationally, at 50.13 per cent, up from 49.55 per cent the previous year. The figure is quoted from reporting of the June 2026 publication rather than from the CAG document itself.
NITI Aayog, Fiscal Health Index 2026 — inter-state fiscal capacity · Government documentTable 3 on page 32 of the Index gives own tax revenue of about 6-7 per cent of gross state domestic product in the Himalayan states against about 8 per cent in the major states; dependence on the Centre of 60-90 per cent of revenue receipts against 30-50 per cent; and debt of 30-40 per cent or more of GSDP against usually under 30 per cent. Page 24 records that own-tax bases in these states are limited and economic activity dispersed and informal.

Alongside this

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

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Who is responsible

Evidence and sources

Alongside this

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