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Large states’ revenue growth to see uptick at 7-9% in FY26: Crisil Ratings
Jul-30-2025

Crisil Ratings in its research report has said that revenue growth of 18 large states, which account for over 90 per cent of the gross state domestic product, is likely to witness a marginal uptick at 7-9 per cent to Rs 40 lakh crore this financial year (FY26). It said this is slightly higher than 6.6 per cent notched up in the last fiscal, though lower than the decadal growth of around 10 per cent.

The increase in revenue growth will be supported by steady GST collections and devolution by the Centre. Maharashtra, Gujarat, Karnataka, Tamil Nadu and West Bengal are among the 18 large states. The states’ revenue streams comprise two components, namely own tax revenue and transfers from the Centre. The own tax revenue of these states is expected to grow around eight per cent this financial year, driven by GST and liquor tax, with a modest growth in petroleum tax. 

Grants from the Centre are expected to recover and grow by three to four per cent due to higher outlay of centrally sponsored schemes. It mentioned the calculations assume India’s nominal GDP growth of nine per cent this fiscal. However, global uncertainties, domestic consumption patterns and inflationary trends can alter these estimates. It added to ensure sustainable revenue growth, the states will have to focus on expanding their own revenue and improving collection efficiency. 


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