Gujarat’s fiscal deficit doubles in a year:State leans heavily on debt to fund surging expenses; accumulates loans worth over ₹42,000 cr

Gujarat’s fiscal deficit witnessed a sharp spike, doubling in a single year to reach Rs 49,964.9 cr for 2024-25 (provisional), up from Rs 23,493.26 cr in 2023-24. Notably, fiscal deficit is the shortfall between the government’s total revenue and its total spending, which dictates its borrowing needs. According to the Finance Department’s Socio-Economic Review 2025-26, this massive borrowing requirement has pushed the state heavily toward domestic debt markets to bridge its funding gap. Compared to the size of the state’s economy, the fiscal deficit nearly doubled from 0.96% in 2023–24 to 1.81% in 2024–25. The fiscal deficit is measured as a percentage of the Gross State Domestic Product (GSDP), which is the total value of all goods and services produced in the state. Factors behind fiscal burden This aggressive widening of the fiscal deficit is driven by two primary factors. First, the state’s revenue surplus practically halved, shrinking from Rs 33,477.03 cr to Rs 18,942.93 cr over the year. A revenue surplus occurs when a government’s regular, recurring income (like tax collections) exceeds its day-to-day operational expenses (like government salaries, maintenance, and pensions). While Gujarat’s revenue receipts dipped slightly, these daily revenue expenditures increased. Second, despite the squeezed revenue cushion, Gujarat aggressively ramped up its capital expenditure. Capital expenditure, or Capex, represents money invested by the government to create, upgrade, or acquire long-term physical assets. This developmental spending jumped massively from Rs 84,482.23 cr to Rs 98,105.81 cr. State’s debt accumulation Unable to comfortably absorb this heavy capital investment out of its shrinking surplus, Gujarat accumulated a total public debt of Rs 51,253.01 cr to maintain the deficit and cover its liabilities. To finance this, the state ventured deep into the domestic debt market. Out of the total public debt, a staggering Rs 42,053.9 cr was raised directly through the internal debt of the state government, utilising borrowing mechanisms like market bonds and state development loans. The remainder of the gap was bridged via Rs 9,199.11 cr in loans and advances from the Central government. ‘Debt healthy’ Gujarat The review data also shows that the deficit remains well within the 3% limit mandated by the FRBM Act. The Fiscal Responsibility and Budget Management (FRBM) Act is a law enacted to ensure financial discipline by setting caps on government borrowing and debt accumulation. Talking on this situation, Congress spokesperson Manish Doshi alleged, “Amid tall claims of a ‘double-engine’ government, a mountain of debt has now piled up on Gujarat.” He further alleged that over the past several years, big projects have been announced in the name of development, grand ceremonies have been organised, and crores of rupees have been spent on advertisements and photo-op events. He remarked that public funds should be used for development — to strengthen education, healthcare, agriculture, employment, and small industries.