A recent report from the Comptroller and Auditor General (CAG) reveals a significant surge in committed expenditure by Indian states. Over a decade, from fiscal year 2013-14 to 2022-23, expenses for salaries, pensions, and interest payments have skyrocketed by nearly 2.5 times, climbing from ₹6,26,849 crore to a staggering ₹15,63,649 crore.
A substantial portion of states’ revenue spending is allocated to “committed expenditure” – funds that are essentially fixed. This category primarily includes outlays for government employee salaries, pension benefits, and the interest paid on public debt and other liabilities.
Analyzing the decade between 2013-14 and 2022-23, the CAG’s inaugural publication on State Finances highlights that revenue expenditure consistently accounted for 80-87% of total state spending, hovering around 13-15% of the combined Gross State Domestic Product (GSDP). Specifically, in FY 2022-23, revenue expenditure stood at 84.73% of total expenditure and 13.85% of the combined GSDP.
For the fiscal year 2022-23, committed expenditure alone accounted for ₹15,63,649 crore out of a total revenue expenditure of ₹35,95,736 crore. Additionally, states spent ₹3,09,625 crore on subsidies and ₹11,26,486 crore on grants-in-aid. Cumulatively, these three categories — committed expenditure, subsidies, and grants-in-aid — amounted to ₹29,99,760 crore, representing over 83% of the total revenue expenditure, as detailed in the comprehensive report on the finances of 28 states.
The report further elaborates that committed expenditure on salaries, pensions, and interest payments saw a dramatic increase from ₹6,26,849 crore in FY 2013-14 to ₹15,63,649 crore by FY 2022-23. Similarly, spending on subsidies surged from ₹96,479 crore in 2013-14 to ₹3,09,625 crore in 2022-23.
In summary, the CAG report states: “Over the period 2013-14 to 2022-23, revenue expenditure increased by 2.66 times, committed expenditure increased by 2.49 times, and subsidy increased by 3.21 times.”
For the majority of states (19 in 2022-23), salaries represented the largest part of committed expenditure, followed by pensions and then interest payments. However, in nine specific states—Andhra Pradesh, Gujarat, Haryana, Karnataka, Punjab, Rajasthan, Tamil Nadu, Telangana, and West Bengal—interest payments exceeded pensionary expenditure, signaling heavier debt burdens.
Interestingly, in the preceding nine-year span (FY 2013-14 to 2021-22), interest payments were consistently the second-largest component of committed expenditure, just after salaries.
The CAG report also analyzed states’ fiscal targets for 2022-23. Out of 17 states aiming for a revenue surplus, five (Assam, Bihar, Himachal Pradesh, Meghalaya, and Rajasthan) unfortunately ended up with a revenue deficit. This means only 12 states successfully met their revenue surplus goals.
Meanwhile, five states explicitly targeted revenue deficits: Andhra Pradesh (3.30%), Haryana (0.98%), Karnataka (0.78%), Maharashtra (1.42%), and Punjab (1.99%). Among these, Karnataka managed to achieve a revenue surplus, while Maharashtra stayed within its targeted deficit of 1.42% of GSDP. The other three states, however, exceeded their planned revenue deficit limits.
Of the 12 states that actually reported a revenue deficit in 2022-23, only nine—Andhra Pradesh, Assam, Himachal Pradesh, Kerala, Meghalaya, Punjab, Rajasthan, Tamil Nadu, and West Bengal—received revenue deficit grants from the Finance Commission during that fiscal year.