Karnataka leads in the growth rate of State’s tax revenue (excluding share of union taxes) followed by Maharashtra and Uttar Pradesh during April-November period of Fiscal Year 2025-26, data from Comptroller & Auditor General of Account (C&AG) showed.
Meanwhile, Gujarat is on top in terms of increase in the Capital Expenditure (capex), with Maharashtra coming second, followed by Karnataka. Though, in terms of amount spent, Uttar Pradesh is much ahead of other States during the April-November period of the current fiscal, however, it recorded degrowth as compared to the corresponding period of last fiscal.
According to data, although Karnataka saw the highest growth rate in terms of tax revenue (excluding the share of Union Taxes), it is behind Maharashtra and Uttar Pradesh in absolute number. One key reason is that collection from SGST (State Goods & Services Tax) has been affected by the post-GST rate rationalisation made effective September 22, 2025. In fact, this was visible in all the major States. However, some improvement was recorded in other sources of tax revenue, including State Excise duty.
Key States’ fiscal data (Apr–Nov) shows own tax revenue and capital expenditure trends (in ₹ crore) based on C&AG data: For own tax revenue, Karnataka increased from 1,10,856 in 2024–25 to 1,34,109 in 2025–26 (20.97%), Maharashtra from 2,16,548 to 2,34,259 (8.17%), Uttar Pradesh from 1,82,483 to 1,94,521 (6.59%), Gujarat from 92,185 to 97,338 (5.59%), while Tamil Nadu declined from 1,26,020 to 1,23,519 (–1.98%); for capital expenditure, Gujarat rose from 29,430 in 2024–25 to 43,611 in 2025–26 (48.18%), Maharashtra from 28,828 to 34,317 (19.03%), Karnataka from 20,187 to 25,533 (16.57%), while Tamil Nadu fell from 22,542 to 19,706 (–12.58%) and Uttar Pradesh from 53,884 to 40,601 (–24.65%).
At the same time, capital expenditure in States saw a mixed trend during the April-November period of FY26. Gujarat, Karnataka and Maharashtra saw growth, while that in Tamil Nadu and Uttar Pradesh declined as compared to corresponding period of the last fiscal. It is believed that many States are pushing their capex aggressively to develop physical infrastructure such as road and airports in line with the Central Government.
Despite higher capex, States’ fiscal deficit (difference between expenditure and income) is not likely to be affected much. C&AG data showed that while Maharashtra’s fiscal deficit for 8-month period is around 16 per cent of the Budget Estimates, Karnataka’s number is around 4 per cent, Gujarat’s number is around 35 per cent and Uttar Pradesh’s number is little over 5 per cent. Tamil Nadu’s number has not been mentioned.
According to RBI, the deficit indicators of States during April-October 2025, as a proportion of BE (Budget Estimates) for the financial year, were lower than the same period last year. This improvement was driven by a sharp moderation in revenue expenditure growth. Within revenue receipts, State excise growth remained strong, while SGST growth decelerated, it said.
A report by PRS said that for 2025-26, States’ fiscal deficit limit has been set at 3 per cent of GSDP, as recommended by the 15th FC. The 15th FC had recommended additional annual borrowing space of 0.5 per cent of GSDP between 2021-22 and 2025-26 for undertaking power sector reforms. In 2025-26, States have estimated a fiscal deficit of 3.2 per cent of GSDP. The fiscal deficit of States excluding the SASCI loans is estimated at 2.8 per cent of GSDP. These loans are excluded from the annual borrowing ceiling of States, according to the Centre’s guidelines. States with high fiscal deficit include Sikkim (4 per cent), Madhya Pradesh (4 per cent), Punjab (3.8 per cent) and Andhra Pradesh (3.8 per cent).
