Changes in the economic structure of indian state governments, including vertical fiscal imbalance, sustainable governance, financing, and cash management - an assessment

The COVID-19 pandemic has significantly reduced Indian states' fiscal capacity, necessitating increased revenue expenditures. Technology, economic formalization, institutional changes, and taxation can increase fiscal capacity, enhancing SGST collections, which account for 40% of Finance Commissions' revenue. The fiscal conditions of Indian states in the years 2021-22, 2022-23, and 2023-24, with an emphasis on debt dynamics, revenue growth, spending management, fiscal consolidation, tax modifications, and public-sector revitalization. The budget deficit of India increased by 39.3% in the first quarter of 2023, indicating a vertical fiscal imbalance. To address this issue, fiscal policy instruments such as public debt, taxation, and budgeting are required. The paper adopts a conceptual, diagnostic, and descriptive research approach, relying on empirical evidence and secondary research, and working with scholars and professionals to collect data from various sources.Due to eased lockup restrictions, India's economy changed from a mixed planned to a mixed middle-income social market with a substantial public sector and revenue growth in 2021-2022.The Indian government intends to increase state capital outlay by 42.6% to 2.9% of GDP in 2023-24, with a 30% credit increase from the Center's Special Assistance Scheme.Despite the foregoing, the main purposes of this research article are to use secondary sources of information and pertinent statistical data to analyze the changes in the economic structure of Indian state governments, including vertical fiscal imbalance, sustainable governance, financing, and cash management, among other related issues, in a macroeconomic theoretical analysis. This viewpoint holds that the current state of affairs is significant and pertinent to the economy and society.