CAG’s ‘State Finances 2023–24’ Report

The Comptroller and Auditor General of India (CAG), in its report State Finances 2023–24, has raised concerns over the growing dependence of states on Ways and Means Advances (WMA)—short-term loans from the Reserve Bank of India (RBI) to bridge temporary mismatches between receipts and expenditure.

Telangana Among Top WMA Users
Telangana was among three states—Telangana, Rajasthan and Andhra Pradesh—that together accounted for 62% of the total WMA, including overdrafts, availed by states during 2023–24.

• Telangana used WMA for 349 days, indicating near-continuous dependence throughout the year, the CAG noted.

Revenue Surplus but Cash Flow Stress
Despite being in revenue surplus during the fiscal year, Telangana still resorted to WMA. According to the CAG, this points to a mismatch between inflows and outflows of receipts, reflecting cash flow management challenges rather than structural revenue inadequacy.

Rising Fiscal Deficit Concerns
Telangana, along with Chhattisgarh, Karnataka, Maharashtra, Rajasthan and Uttar Pradesh, witnessed a substantial increase in fiscal deficit in 2023–24 compared to the previous year.

• Telangana was among 18 states that recorded a fiscal deficit of 3.41% of GSDP, breaching the 3% target set by the 15th Finance Commission for fiscal consolidation.

States’ Own Tax Revenue (SOTR) Trends
The report highlighted that States’ Own Tax Revenue (SOTR) remained the single largest source of income for Indian states in 2023–24.

• Combined SOTR of all 28 states stood at about ₹18.8 lakh crore,
• Accounting for nearly 50% of total revenue receipts and 6.49% of aggregate GSDP.

Post-GST Acceleration in Tax Growth
In the post-GST period, average annual SOTR growth accelerated to about 11.7% (2018–19 to 2023–24), compared to 10.5% in the pre-GST era.

• Industrialised and consumption-driven states—Maharashtra, Karnataka, Tamil Nadu, Gujarat, Telangana and Haryana—together contributed around 60% of total SOTR.