Gujarat and Odisha lead in fiscal health; Bihar, Telangana, Andhra, and Kerala face slippage; Maharashtra, Odisha, Jharkhand’s freebies may strain budgets; state borrowing rose 16.6% to Rs 12.5 trillion in FY26.

Gujarat and Odisha show strong fiscal health with low debt, manageable deficits, and high capital spending, while Punjab faces pressure from high debt and non-developmental spending. Bihar has high debt but low interest burdens due to central transfers. Telangana, Andhra Pradesh, and Kerala are experiencing fiscal slippage, having nearly exhausted their deficit targets early. Freebie announcements in Maharashtra, Odisha, and Jharkhand may strain budgets. Aggregate state borrowing hit Rs 12.5 trillion in FY26, up 16.6% from last year, driven by redemption needs through 2031.