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States’ revenue to grow by 9-11% to Rs 44 lakh crore in FY27: Crisil Ratings
Sep-23-2026

The rating agency Crisil Ratings, in its latest report, has forecasted 9-11% growth in revenue of 18 large states, which account for more than 90% of India’s gross state domestic product (GSDP), this fiscal (FY27). It noted that the states’ revenue is expected to reach Rs 44 lakh crore in FY27. It highlighted that the upturn will be led by growth in states’ GST collections and tax devolution from the Centre, even as growth in several other revenue streams remains moderate. Own taxes contribute a little over half of states’ revenue receipts of which, GST accounts for around 40-45%, while taxes on liquor and petroleum products are the other significant contributors.

Crisil has emphasized that GST 2.0, implemented in September 2025, is expected to improve revenue buoyancy in this fiscal. Further, GST revenue of states grew 16% on-year in the five months ended August 31, 2026, aided by nearly 30% growth in IGST collections from imports of electronics, machinery, gold, fertilisers and other key goods. However, it noted that the pace is expected to normalise as commodity prices stabilise and currency volatility eases in the second half of the fiscal. 

Meanwhile, the states’ other own-tax streams are expected to grow more steadily. Crisil said that revenue from liquor sales is expected to increase 7-8%, reflecting stable consumption and periodic revisions in duties and fees. Further, petroleum-tax revenue is projected to grow 4-5%, driven mainly by volume expansion and higher pump prices with states having thus far refrained from reducing tax rates. Besides, other own-tax revenue, led by stamp duty collections, is expected to grow 6-7% off a high base as growth in the real-estate sector moderates. Overall, own-tax revenue of states should increase 9-10% this fiscal, with GST providing the primary impetus.

Apart from taxes, Crisil said that grants-in-aid are expected to rise 6-7% this fiscal, supported by higher allocations for urban and rural local bodies under the 16th Finance Commission framework, subject to performance-linked conditions, as well as increased funding for a few key centrally sponsored schemes. Moreover, the non-tax revenue, driven largely by mining royalties, is projected to grow 9-10%, aided by stable mineral production, firmer prices and continued auctions of mineral blocks. However, the aggregate improvement will not be uniform across states as outcomes will depend on the revenue mix, tax buoyancy and compliance with grant-linked conditions. Crisil’s projections assume nominal gross domestic product growth of around13% in fiscal 2027, compared with around 8.9% in the previous fiscal.
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