CAG audit flags rising fiscal gap in Sikkim despite revenue surplus and growth
An audit report says Sikkim’s fiscal deficit and liabilities rose in 2024-25, exceeding FRBM limits, even as the state recorded double-digit growth and a small,
Sikkim’s fiscal position came under pressure in 2024-25, according to the Comptroller and Auditor General (CAG). The audit says the state’s fiscal deficit crossed statutory limits, public debt inched above the set ceiling, and off-budget liabilities increased significantly. The findings come at a time when the state economy expanded and Sikkim continued to record a revenue surplus.
Despite the positive growth picture, the report highlights that the numbers did not translate into enough fiscal space for tighter planning. It notes that Sikkim’s Gross State Domestic Product (GSDP) grew by 11.15% to Rs 53,340 crore, and per capita income rose to Rs 6.46 lakh. Over the past five years, the state economy expanded at a compound annual growth rate (CAGR) of 12.74%, with manufacturing and other secondary-sector activity playing a key role.
Deficit and debt exceed FRBM limits
The audit says the fiscal deficit widened to Rs 2,980 crore, which is 5.59% of GSDP. This exceeded the 3% limit under the Fiscal Responsibility and Budget Management (FRBM) framework. Public debt also rose to 28.09% of GSDP, marginally above the 28% threshold mentioned in the framework.
At the same time, undischarged liabilities—including off-budget borrowings, unpaid interest obligations, and short transfers to the National Pension System (NPS)—reached Rs 1,295.42 crore. The CAG report places these liabilities at 10.42% of the state’s total expenditure of Rs 12,431.62 crore. Total expenditure during the year was Rs 12,431.62 crore, while total receipts were Rs 12,454.46 crore.
Revenue growth, but limited room for spending
Revenue receipts increased by 13.17% year-on-year to Rs 9,451.25 crore. The audit attributes much of this to stronger GST collections and a higher share in central taxes. Tax revenue rose to Rs 6,904.97 crore, and Sikkim’s share of Union taxes climbed to Rs 5,090.10 crore, together accounting for more than half of total revenue receipts.
However, the report says Sikkim’s own revenue base remained limited. State tax and non-tax revenues were Rs 2,724.92 crore, compared with central grants of Rs 1,636.23 crore, showing continued reliance on transfers. It also notes that growth in state own revenue slowed to 3.9%, well below GSDP expansion. The CAG further points out that committed spending—such as salaries, pensions, and interest payments—accounted for 73.4% of revenue expenditure, leaving less flexibility for development and infrastructure work. Interest payments increased to Rs 948.59 crore. Overall, total liabilities rose by 18.2% to Rs 28,438 crore.
