CRISIL Ratings in its latest report has said that revenues of top 18 states, which account for 90 per cent of India's gross state domestic product, are likely to grow at a pace of 8 to 10 per cent during the current financial year (FY25) at Rs 38 lakh crore. Last fiscal, the revenues of the 18 states grew by seven per cent.
It stated the growth will be primarily driven by robust GST collections and devolution of finances from the Centre, which comprise around 50 per cent of the aggregate state revenues. Moreover, it said that while revenue on liquor sales, which is ten per cent of the states' revenues, is expected to remain stable, collections of sales tax imposed on petroleum products and grants recommended by the 15th Finance Commission will be modest.
Senior director of CRISIL Ratings Anuj Sethi said that the biggest impetus to revenue growth will continue to come from aggregate state GST collections and also from improved tax compliance and greater formalisation of the economy. Central tax devolutions are expected to grow by 12 to 13 per cent in the current financial year which will be an important driver. Grants from the Centre will grow by four to five per cent, which is in line with the Budget outlay.
