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The State of State Government Finances in India


  • Bajpai, N.
  • Sachs, J.D.


The financial condition of the state governments in India has been a cause for concern for sometime now. Over the years, the consolidated financial position of the state governments has shown a marked deterioration in some of their major deficit indicators. One of the fundamental weaknesses of state government finances in India can be attributed to the increases in non- developmental expenditure, particularly the revenue component of the non-developmental expenditure, and interest payments as a proportion of revenue receipts. Structural imbalances in the form of large revenue deficits, rising interest burden, increasing distortions in the pattern of expenditure, and very slow growing non-tax revenues are major problem areas for state finances.

Suggested Citation

  • Bajpai, N. & Sachs, J.D., 1999. "The State of State Government Finances in India," Papers 719, Harvard - Institute for International Development.
  • Handle: RePEc:fth:harvid:719

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    Cited by:

    1. Lavrov, Aleksei & Litwack, John & Sutherland, Douglas, 2001. "Fiscal federalist relations in Russia: a case for subnational autonomy," MPRA Paper 26537, University Library of Munich, Germany.
    2. Jeffrey D. Sachs & Nirupam Bajpai, 2001. "The Decade of Development: Goal Setting and Policy Challenges in India," CID Working Papers 62A, Center for International Development at Harvard University.

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    JEL classification:

    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism


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