Key Points
Their own tax revenues as a share of gross state domestic product (GSDP) are seen to be lower than that of the other states and they are heavily dependent on transfers from the central government..
A look at their state of finances and their evolution over time would help in assessing the efficacy of fiscal transfers and in designing appropriate instruments for supporting the states with limited fiscal capacity...
A look at state-wise total outstanding liabilities as percentage of GSDP shows that northeastern (NE) states feature amongst the most indebted states..
Looking at a longer time frame, while some of the NE states have managed to lower their liabilities as a share of GSDP, states like Meghalaya and Nagaland have seen an increase in their outstanding liabilities as a share of GSDP.. Further, some of these states have deviated from the path of debt reduction laid out by the Fifteenth Finance Commission..
A higher share of committed expenditure limits the ability of states to spend on capex.As an example, in Nagaland, capital outlay in the current year is expected to contract by 42 percent over the previous year...
