Reports & Indexes★ Must KnowArticle 5 of 18

States' expenditure rose 131% in a decade on welfare and development: CAG

Tuesday, 16 June 2026· 5 min read·Source: The Economic Times

A Comptroller and Auditor General (CAG) report found that states' expenditure surged 131% from 2015-16 to 2024-25, driven by welfare and development spending, with total state expenditure reaching Rs 51.20 lakh crore in 2024-25. Revenue expenditure remained the largest component, and committed expenses and subsidies consumed over half of revenue spending. The report, reported around June 16, 2026, flagged that committed liabilities (salaries, pensions, interest) and subsidies leave states limited fiscal room for capital investment, raising concerns about the quality and sustainability of state finances.

Key Facts & Details

8 points

1
States' expenditure rose 131% from 2015-16 to 2024-25, per the CAG.
2
Total state expenditure reached Rs 51.20 lakh crore in 2024-25.
3
Welfare and development spending drove the increase.
4
Committed expenses and subsidies took over half of revenue spending.
5
Heavy committed liabilities limit states' room for capital investment.

Deep Dive

+
Revenue expenditure (day-to-day spending) dominates state budgets over capital expenditure (asset creation).
+
Committed expenditure includes salaries, pensions and interest payments that states cannot easily cut.
+
The CAG audits government accounts and reports to legislatures under the Constitution.

Exam Focus

By how much did states' expenditure rise over the decade to 2024-25, according to the CAG report?

Exam Relevance & Angle

CAG findings on state finances are public-finance/fiscal-federalism GA, tested on the CAG's constitutional role and headline figures on revenue versus capital and committed spending.

Target Exams

SBI POIBPS POIBPS RRB OfficerRBI Grade BNABARD Grade ASSC CGLLIC AAOUPSC CSEState PCS

Background & Context

The Comptroller and Auditor General (CAG) of India is a constitutional authority under Articles 148-151, responsible for auditing the accounts of the Union and state governments and reporting to the respective legislatures. State spending is split into revenue expenditure (recurring — salaries, pensions, subsidies, interest) and capital expenditure (asset-creating — roads, schools, hospitals). Committed expenditure refers to obligatory recurring payments. High committed and subsidy spending squeezes the fiscal space for productive capital investment, a recurring concern in assessments of state fiscal health and fiscal federalism.