CAG Report 2025: UP Tops Revenue Surplus List While Andhra Pradesh Faces Highest Deficit

Introduction

The Comptroller and Auditor General (CAG) of India has released its fiscal report for the financial year 2022-23, shedding light on the economic condition of Indian states. According to the report, 16 states recorded a revenue surplus, demonstrating strong fiscal management, while 12 states ended the year with revenue deficits. Among them, Uttar Pradesh (UP) led the surplus states with ₹37,000 crore, whereas Andhra Pradesh faced the highest revenue deficit of ₹43,488 crore.

States with Revenue Surplus

The report highlights that several states managed to spend less than their revenue collection, leading to a surplus. Uttar Pradesh emerged as the leader with a surplus of ₹37,263 crore, followed by Gujarat with ₹19,865 crore and Odisha with ₹19,456 crore. Other states achieving surplus include Karnataka, Chhattisgarh, Telangana, Jharkhand, Madhya Pradesh, Uttarakhand, and Goa. Notably, northeastern states such as Mizoram, Arunachal Pradesh, Manipur, Nagaland, Tripura, and Sikkim also reported positive revenue balances, reflecting sound fiscal strategies and prudent management of resources.

Uttar Pradesh’s Fiscal Achievement

Uttar Pradesh’s strong performance is particularly notable, as the state has historically been categorized as economically lagging. Achieving a revenue surplus of ₹37,000 crore marks a significant turnaround for UP, reflecting better financial management, improved revenue mobilization, and enhanced economic growth. This remarkable performance positions Uttar Pradesh as a model for other states looking to stabilize their finances.

States Facing Revenue Deficit

In contrast, Andhra Pradesh recorded the largest revenue deficit at ₹43,488 crore. Other deficit states include Tamil Nadu with ₹36,215 crore, Rajasthan with ₹31,491 crore, and West Bengal, Punjab, Haryana, Assam, Bihar, Kerala, Himachal Pradesh, Maharashtra, and Meghalaya also reporting shortfalls. The deficits highlight the fiscal challenges these states face in balancing revenue collection and expenditure.

Impact of Revenue Deficits on States

Revenue deficits can severely affect a state’s economic stability and its ability to fund essential development projects. States running deficits often depend on grants from the central government to meet expenditure requirements. For example, West Bengal, Kerala, and Andhra Pradesh received the largest share of revenue deficit grants, accounting for 16%, 15%, and 12% of their total revenue, respectively. This dependence on central support can limit the flexibility of state governments to invest in infrastructure, healthcare, education, and other critical sectors.

Factors Affecting State Fiscal Health

A range of factors influence the fiscal condition of states. States achieving surpluses often benefit from efficient tax collection mechanisms, effective expenditure control, and diversified economic activity. Conversely, deficit states face challenges like lower tax revenues, higher social welfare spending, and economic constraints that make it difficult to maintain fiscal balance. Strategic management of revenue and expenditure is therefore essential to achieving sustainable state finances.

Strategies for Fiscal Improvement

To reduce revenue deficits, deficit states must focus on increasing revenue streams and controlling expenditure. Measures may include broadening the tax base, enhancing compliance, exploring non-tax revenue sources, and minimizing inefficient spending. Economic diversification and attracting private investment can also boost state revenues. Adopting sound fiscal practices and carefully prioritizing expenditures can help deficit states move toward surplus and ensure long-term financial stability.

Conclusion

The 2025 CAG report offers valuable insights into the fiscal performance of Indian states. Uttar Pradesh’s emergence as the top revenue surplus state demonstrates the effectiveness of disciplined financial management. On the other hand, Andhra Pradesh’s substantial deficit underscores the need for targeted fiscal reforms. By implementing prudent revenue policies, controlling expenditure, and promoting economic growth, states can achieve fiscal balance, enabling sustainable development and enhanced welfare for citizens.