India’s State finances are showing signs of renewed pressure, CareEdge report on Analysis of State Finances shows. After staying below 3% for three years, fiscal deficit has risen to 3.3% of GSDP in FY25. Debt levels remain high at around 28%, well above the recommended 20% limit. Several large States such as Punjab, Bihar, Rajasthan and Kerala face both high debt and high deficits. Despite high debt, aggregate interest payments have moderated to around 12% of revenue receipts, partly supported by the Centre’s interest-free loans that reduced repayment pressure. Key facts:
Published on March 3, 2026