critical analysis of the fiscal health of Indian states . For a UPSC aspirant, this falls under General Studies Paper III (Indian Economy and issues relating to planning, mobilization of resources, growth, development, and employment ). The Crisis of ‘Freebie Culture’ and Declining State Capital Expenditure Context Recent budgetary estimates for the fiscal year 2025-26 reveal a concerning trend in state finances. A significant portion of state revenue—up to 80% in some cases—is being consumed by "committed expenditures" such as salaries, pensions, interest payments, and populist subsidy schemes (freebies). This leaves negligible funds for developmental projects like roads, electricity, and housing. Key Data Insights (FY 2025-26 Estimates) According to the report, states are struggling with a shrinking fiscal space for development: * The Punjab Crisis: Punjab is in the most precarious position, with committed expenses and debt servicing far exceeding its earnings, leading to...
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