RBI / research · Reserve Bank of India · 2023-12

RBI State Finances: A Study of Budgets of 2023-24 - Revenue Dynamics and Fiscal Capacity of Indian States

The RBI's annual study of state budgets for 2023-24 took 'Revenue Dynamics and Fiscal Capacity of Indian States' as its theme. It traces how states' own tax revenue changed after 2017. It finds that SGST has become the largest single part of states' own tax revenue and that GST has raised states' tax buoyancy. It also discusses the end of GST compensation and the fiscal room states have for raising their own revenue.

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Key findings and recommendations

  • From 2017-18, SGST became the most important source of states' own tax revenue.
  • The study finds that GST raised states' tax buoyancy, measured as tax growth relative to nominal GDP growth.
  • It examines how the end of compensation in 2022 affects states' fiscal capacity.

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