MUMBAI
Revenue growth across 18 large Indian states is expected to accelerate to 9-11 per cent in fiscal 2027, supported by stronger Goods and Services Tax collections and higher tax devolution from the Centre, Crisil Ratings said on Tuesday.
The states, accounting for more than 90 per cent of India’s gross state domestic product, are projected to record combined revenue of more than Rs 44 lakh crore in fiscal 2027, compared with around 8 per cent growth estimated last fiscal. GST is expected to remain the driver, with state GST revenue projected to rise 12-13 per cent.
State GST collections have increased 16 per cent year-on-year in the five months ended August 31, 2026. Integrated GST collections from imports rose nearly 30 per cent, helped by electronics, machinery, gold and fertilisers. Crisil expects the pace to moderate in the second half as commodity prices stabilise and currency volatility eases.
Tax devolution from the Centre is expected to rise 11-12 per cent this fiscal, providing a boost to state revenues. Among own-tax sources, liquor revenue is projected to grow 7-8 per cent, petroleum-tax revenue 4-5 per cent and other own-tax revenue, led by stamp duties, 6-7 per cent. Overall own-tax revenue is expected to grow 9-10 per cent.
Crisil expects grants-in-aid to increase 6-7 per cent and non-tax revenue, driven largely by mining royalties, to grow 9-10 per cent. The projections assume nominal GDP growth of 13 per cent in fiscal 2027. Global uncertainty, inflationary pressures, changing consumption patterns and compliance with grant-related conditions remain risks. Crisil Senior Director Anuj Sethi said GST revenue would be supported by resilient domestic consumption and robust import-linked collections, while GST 2.0 should improve revenue buoyancy.
