Analyzing the Fiscal Health of State Governments in India: Evidence from the 14 Major States

Abstract

The paper seeks to assess the fiscal sustainability of the 14 major State (subnational) governments in India employing the deficit indicators approach. Evidence from the 14 States indicates to a deep fiscal stress across rich and poor States with just a third of the States showing a sustainable revenue account and primary revenue balance and even fewer States showing a sustainable primary deficit thereby reinforcing the serious concern for State‐level (subnational) fiscal health as weak State finances can have an impact on the stability of overall government finances.