And the winner is.....

Nomura has made an interesting study and put out a report on India’s best financially managed states. And no, it is not Gujarat. The surprising winner is Chhattisgarh! This under developed state has piped all the well- developed states and emerged right on top. Why Chhattisgarh? According to Nomura – it stands out as the financially most well-managed state in India, because of a revenue surplus budget and low interest payment burden.

Nomura has ranked the states on five financial parameters—fiscal deficit or surplus, revenue deficit or surplus, share of own taxes in revenue, share of capital expenditure in total expenses, and interest payment as a share of expenditure—to calculate a “Z-score.”

Gujarat ranks number two, followed by MP, Bihar, Jharkhand, Odisha, Goa, TN, UP, Maharashtra. Last two on the list – Kerala and last West Bengal. In fact, West Bengal and Punjab spend 19.6% and 17.2% of their overall expenditure on interest payments, respectively which is well above the state average of 9.5%. Chhattisgarh, Goa, Odisha and Telangana have the least interest costs.

Nomura’s analysis also found that western states were less reliant on central government taxes—than those in the east—as a source of revenue, and generated more income on their own. Eastern states also spent more on capital expenditure.