A recent report by the Comptroller and Auditor General (CAG) on state finances has revealed that 16 states in India have a revenue surplus. The report, a decadal study on the economic performance of states, marks a significant shift in the financial landscape.

One of the most surprising findings is the leading position of Uttar Pradesh (UP) in this group. Once notorious as one of the "Bimaru" states, a term used to describe states with poor economic performance, UP has demonstrated remarkable progress, reporting a surplus of ₹37,000 crore in the fiscal year 2023. UP's revenue surplus for 2022-23 was 1.65% of its Gross State Domestic Product (GSDP). The state also maintained a fiscal deficit of approximately 2.86% of GSDP, remaining within the 3.50% target set by the Uttar Pradesh Fiscal Responsibility and Budget Management (UPFRBM) Act of 2004.

Furthermore, UP's total revenue receipts for the year amounted to ₹4,17,241.50 crore. However, the CAG has also recently questioned Uttar Pradesh's budget management procedures, pointing out deviations from prescribed budgetary and accounting processes, including misclassification between revenue and capital expenditure.

Madhya Pradesh, another state previously categorized as "Bimaru," also joins UP in the group of states with more revenue receipts than expenditure.

Other states with revenue surpluses, as reported by the CAG, include: * Gujarat (₹19,865 crore) * Odisha (₹19,456 crore) * Jharkhand (₹13,564 crore) * Karnataka (₹13,496 crore) * Chhattisgarh (₹8,592 crore) * Telangana (₹5,944 crore) * Uttarakhand (₹5,310 crore) * Madhya Pradesh (₹4,091 crore) * Goa (₹2,399 crore) * The northeastern states of Arunachal Pradesh, Manipur, Mizoram, Nagaland, Tripura, and Sikkim.

Conversely, the CAG report identified 12 states with revenue deficits in 2022-23. These include Andhra Pradesh, Tamil Nadu, Rajasthan, West Bengal, Punjab, Haryana, Assam, Bihar, Himachal Pradesh, Kerala, Maharashtra and Meghalaya. West Bengal received the largest share (16%) of grants in FY2023 to bridge the gap between its revenue receipts and expenditure, followed by Kerala (15%), Andhra Pradesh (12%), Himachal Pradesh (11%), and Punjab (10%).

The CAG's analysis also reviewed fiscal targets set by states, noting that in 2022-23, 17 states aimed for a revenue surplus, six targeted zero revenue deficit, and five planned for revenue deficits. Of the 17 states aiming for a surplus, five—Assam, Bihar, Himachal Pradesh, Meghalaya, and Rajasthan—ended up in deficit, while 12 achieved their surplus goals. Among the five states targeting revenue deficits, Karnataka turned surplus, Maharashtra stayed within its target, and the other three breached their targets.

The report also highlighted the increasing committed expenditure of states, including expenses on salaries, pensions, and interest payments. These expenses have nearly increased 2.5 times over the past decade. Across all 28 states, committed expenditure rose to ₹15,63,649 crore in FY2022-23 from ₹6,26,849 crore in FY2013-14. In FY 2022-23, revenue expenditure reached 84.73% of total expenditure and was 13.85% of the combined GSDP. Subsidies also saw a threefold increase, from ₹96,479 crore in FY2013-14 to ₹3,09,625 crore in FY2022-23.