Social welfare spending by top states to stay high at 2% of GSDP in FY26: CRISIL Ratings

Crisil Ratings said in a statement on Thursday, expenditures made by the first 18 states on social welfare plans, 26 financial years RS 6.4 Lakh Crore in the amount of gross state domestic product (GSDP) is expected to remain high in 2%. However, this would result in a high income deficit and therefore will limit the capital expenditures of states.

Between FY19 and FY24, social welfare expenditures rose to 1.4-1.6% and 25% in 25% of GSDP’s share.

“The increase in income deficit normally causes state governments to reduce capital expenditures to protect their financial stability,” Crisil Ratings Director Aditya Jhaver said. He said.
Last financial, capital expenditures grew by 6% annually (a compound annual growth rate of 11% for 5 years has ended 2024 fiscal year), about 90% of the income deficit annually recorded the balloon.

Jhaver, if this tendency maintains this financial, states that states can restrict capital expenditures – this has a higher multiplier effect and warned that it can promote the increase in investments in the economy.

Income expenditures are budget to save a 13-14% cagr between 2025 and 2026 financial financial. In contrast, income receipts have increased by 6.6% in the last financial year, and this is expected to increase by 6-8% annually in terms of financial terms, income deficit, income protection, total, total, envisaged benefits. As election commitments, he said Crisil.

In recent years, some states have brought or expanded allocations to DBT schemes.

“With the upcoming elections in other states, an increase in DBT can be an increase and an important monitoring can be monitored,” Crisil said.

The analysis includes states such as Maharashtra, Rajasthan, Gujarat, Karnataka, Tamil Nadu, Uttar Pradesh, West Bengal and Kerala.

Crisil Ratings Senior Director Anuj Sethi said, “RS 1.3 Lakh Crore Increase (Social Welfare Expenditures) is primarily for financial/ medical assistance to retrospective classes and social security pension to select the focal groups that support the necessary expenditures for socio-economic development.” He said.

However, Crisil stressed that the increase in social welfare expenditures in this financial year will not be uniform among the states. While 50% of the analyzed situations are expected to see a “significant increase ında in expenditure, others will make a modest increase.