As Friday’s Mint analysis of the budgets presented by various state governments this year revealed, most states have not only arrested the decline in their finances, but collectively they may net a small revenue surplus for the first time since 1986-87. A big reason: buoyant tax collections. As the data did not include Punjab and Uttarakhand, which may have spent more on their recent elections, the outcome may well be a small deficit. Still, the signals are positive for the combined state and Central deficit.
West Bengal and Kerala seem to be the worst placed along with Jharkhand—running up higher revenue deficits than budgeted. It may be tempting to ask if it is a mere coincidence that two of these are Left-ruled states. But that’s not easy to say. Kerala has been a high revenue earner till VAT was implemented. West Bengal has been a chronic poor performer on this front. Yet, there’s anecdotal evidence suggesting both states need to set their finances in order.