Jharkhand: A Cautious Surplus in a High-Risk Neighborhood
Acting Consular General Aarsha NS welcomed Chief Minister of Jharkhand, Hemant Soren, to Barcelona (Image credit Indian in Spain Embassy)
The CAG’s decadal State Finances lens and AJNIFM’s PFPI benchmark Jharkhand against peers, spotlight the stock-and-flow risks public debate usually glosses over, and put reputational pressure on future budgets.
By P SESH KUMAR
NEW DELHI, October 1, 2025 — Jharkhand is not Andhra Pradesh or Punjab, and that matters. Where many states are drowning in revenue deficits, Jharkhand still projects a revenue surplus and keeps its fiscal deficit broadly on a leash. Yet this is no fairy-tale.
A commodity-tilted economy, a thin administrative base, and a history of stop-start capex make the surplus fragile. The CAG’s decadal State Finances lens and AJNIFM’s PFPI don’t surprise insiders; they do something tougher: they benchmark Jharkhand against peers, spotlight the stock-and-flow risks public debate usually glosses over, and put reputational pressure on future budgets.
The 2024–25 numbers look tidy on paper—revenue surplus ~4% of GSDP, fiscal deficit ~2%-but the margin for error is slim, and the state’s debt load remains in the high-20s of GSDP. The right reading of these reports is not “mission accomplished,” but “handle with care.”
The picture on the ground: sturdier than the laggards, still not bullet-proof
If we only glanced at Jharkhand’s latest budget math, we would think the state has cracked the code. The 2024–25 budget pegs a revenue surplus of ₹18,968 crore (≈4.0% of GSDP) and aims for a fiscal deficit of about ₹9,500 crore (≈2.0% of GSDP).
Even the 2023–24 revised numbers-revenue surplus ≈1.7% of GSDP, fiscal deficit ≈2.7%-look respectable in a year when many states slipped badly. Put simply: Jharkhand is budgeting to live within its means and borrow largely for investment, not salaries and giveaways. That’s the right instinct.
Scratch the surface and we find both strengths and fault lines. On the plus side, the budget lifts capital outlay by double digits in 2024–25, and projects outstanding liabilities easing to ~27% of GSDP (from a COVID-era peak), a stock position most peers would envy. Committed expenditure pressures (salaries, pensions, interest) are lower than the all-state average, reflecting a leaner payroll and some administrative vacancies-which, awkwardly, is also a constraint on execution capacity.
Now the cautions. First, the surplus is still narrow enough that any revenue wobble-say, softer GST buoyancy, slower mining royalties, or a delay in Union transfers-will squeeze capex.
Second, Jharkhand remains exposed to the commodity cycle; a bad year for minerals dents both own-tax and non-tax flows.
Third, rising competitive populism in neighbouring states raises the political temperature everywhere: it takes only one pre-election spending sprint to flip a neat revenue balance into the red.
What policymakers already knew—and what CAG + PFPI add
No one in Ranchi’s finance department is discovering these risks from the newspapers. The state tracks them daily. The value of the CAG decadal study here is twofold.
One, it freezes the film around 2022–23 and shows the national arc: state debt stocks swelling across the decade, interest costs rising, and quality of spending mixed-context Jharkhand cannot ignore.
Two, by placing every state on a single comparative grid, the report dilutes the comforting myth that “we’re fine because we’re not Punjab.” The median has shifted, and the pressure is systemic.
The PFPI (AJNIFM) 2023–24 goes further by ranking Jharkhand 10th among general-category states with a composite score of 0.510 firmly middle-of-the-pack, not a basket case, not a paragon. That score is a quiet nudge: decent on resources and liabilities, but with clear room to improve on expenditure quality and institutional guardrails against profligacy-areas where a state can slide fast if politics turns generous.
For policymakers and observers, the utility of these two lenses is not novelty; it’s exposure and benchmarking. They convert insider spreadsheets into public expectations.
They make it reputationally costly to raid capex for freebies, and they give finance officials cover to say “no” when the populist itch flares up.
2023–24 and 2024–25: what the numbers really say
The 2023–24 revised estimates tell a tidy but telling story: revenue surplus shrank versus what was budgeted (3.2% → 1.7% of GSDP) because revenue expenditure ran hotter while receipts disappointed-a familiar Indian pattern.
Even so, the state held fiscal deficit at ~2.7%, near glide-path territory and below the stress levels seen elsewhere. The 2024–25 budget attempts a reset: higher receipts, bigger capital outlay, revenue surplus restored to ~4%, and fiscal deficit trimmed to ~2%. Ambitious, yes. Impossible, no-provided the macro holds and departments actually execute capex rather than parking funds in the last quarter.
On the stock side, there’s cautious good news. Jharkhand aims to keep outstanding liabilities around the high-20s percent of GSDP in 2024–25, and recent central windows-like 50-year, interest-free capex loans-can be used to protect investment without busting the FRBM math, if the state qualifies and pipelines are shovel-ready.
External benchmarking from NITI’s 2025 Jharkhand fiscal landscape pegs the state’s 2022–23 debt-to-GSDP near 30%, roughly at the national median; not an alarm, but nowhere near “low-debt” bragging rights either.
The risks Jharkhand can’t Ignore
The risk map is simple. Cyclical receipts are the state’s Achilles’ heel; a soft patch in GST or mining income quickly bleeds the revenue balance. Administrative thinness-large vacancies alongside lower-than-average salary outgo-makes sustained, high-quality capex execution harder than budgeting for it.
Political contagion is real: as the freebie arms race escalates nationally, holding a line at home takes unusual discipline. And debt service is a creeping tax on tomorrow’s development; a few years of relaxed borrowing can turn today’s comfort into tomorrow’s squeeze, as the CAG’s decadal charts nationwide make painfully clear.
Why the “decadal CAG + PFPI” still matter in Ranchi
Because they change the politics of numbers. The CAG’s decadal report reminds everyone that stock-level prudence is a moving target, not a medal you win once.
The PFPI tells investors and citizens that Jharkhand stands in the middle lane, not on the podium-useful humility in a state that needs steady, boring execution more than flashy announcements. Most of all, together they offer cover for discipline: when a finance department blocks an unfunded scheme or resists off-budget borrowings, citing PFPI position or national decadal debt drift is not pedantry-it’s self-defence.
Way forward: protect the surplus, upgrade the engine
Jharkhand’s best strategy is to treat its revenue surplus like a new-born: guard it, feed it, don’t toss it around. That starts with hard ring-fencing of capex and an execution plan that spends through the year rather than bunching in Q4.
It means earning every rupee-tightening GST compliance, modernising stamp-duty valuation, and monetising state land more smartly-so the surplus isn’t hostage to the commodity cycle. It calls for borrowing only for assets and publishing a debt-redemption map that pre-funds the heavy years.
And it requires freebie discipline: targeted benefits with e-KYC and periodic re-verification instead of open-ended, universal entitlements that eat tomorrow’s development. None of this is glamorous. All of it is what keeps a middle-rank PFPI state safely out of the ICU.
If Jharkhand keeps its head while others chase applause, it can convert a cautious surplus into a durable reputation: reliable payer, steady builder, low-drama borrower. In a decade when states are drifting toward “borrow to consume,” that alone will be a competitive advantage.
(This is an opinion piece, and views expressed are those of the author only)
States’ Finances: Freebies, Fiscal Folly, and the Borrowed Future
Follow The Raisina Hills on WhatsApp, Instagram, YouTube, Facebook, and LinkedIn
About The Author
