Overview

• Crisil Ratings projects that the top 18 states will allocate about Rs 6.4 lakh crore, roughly 2% of their combined GSDP, to social welfare schemes in fiscal 2026.
• Roughly Rs 1 lakh crore of that sum is earmarked for direct benefit transfers to women as part of pre-election commitments.
• States’ revenue expenditure is set to grow at a compound annual rate of 13–14% between FY25 and FY26, while revenue receipts are forecast to rise by only 6–8%.
• Last fiscal, capital outlays expanded by just 6% as revenue deficits surged nearly 90%, and similar shortfalls this year could constrain new infrastructure funding.
• Crisil warns that sustained welfare spending without comparable revenue growth could weaken states’ long-term credit profiles, with about half of the evaluated states facing especially sharp spending increases.