Sikkim clocks 3.2-fold rise in tax revenue over decade, among India's fastest: CAG

Sikkim has emerged among India's better-performing states in tax revenue growth over the past decade, while maintaining a revenue surplus and directing a large share of its borrowings towards capital works, according to the Comptroller and Auditor General's State Finances 2024-25 report.

The CAG's decadal analysis of state finances between 2015-16 and 2024-25 shows that Sikkim's own tax revenue increased 3.20 times during the period, placing it among the five states with the fastest growth. It was surpassed only by Arunachal Pradesh, Nagaland, Mizoram and Meghalaya.

The state's tax performance remained strong after the introduction of the Goods and Services Tax (GST). Sikkim's State GST collections rose 139 per cent between 2018-19 and 2024-25, the second-highest growth recorded among states after Arunachal Pradesh.

Sikkim's average annual growth in its own tax revenue since the GST rollout was around 13 per cent, placing it among the four states with the highest growth rates. The others were Arunachal Pradesh, Chhattisgarh and Goa. The all-state average during the same period was around 11 per cent.

The growth in revenue was accompanied by a continued focus on keeping the state's finances in surplus. Sikkim ended 2024-25 with a revenue surplus equivalent to 0.90 per cent of its Gross State Domestic Product (GSDP), meeting its fiscal objective of maintaining a revenue surplus.

The CAG also flagged the state's use of borrowed funds for capital expenditure as a positive feature of its finances. Sikkim recorded capital expenditure of ₹3,463 crore in 2024-25, higher than its net public debt receipts of ₹3,358 crore.

The report identified Sikkim among 14 states where capital expenditure exceeded net public debt receipts during the year. The group also included Assam, Gujarat, Odisha and Uttar Pradesh.

A significant portion of Sikkim's capital spending went into major works, including roads, buildings and other physical infrastructure. More than 80 per cent of the state's capital expenditure was allocated to this category, putting Sikkim among only nine states to cross that mark.

Sikkim was also among 13 states that spent more than 10 per cent of their total budget on major works, indicating a substantial allocation towards physical infrastructure.

At the same time, financial support from the Centre increased sharply over the decade. Loans and advances received by Sikkim from the Central Government rose by 3,118 per cent between 2015-16 and 2024-25, the second-highest increase among states after Meghalaya.

The figures, taken together, show a state that expanded its own tax base while keeping its revenue account in surplus and allocating substantial resources towards infrastructure and other capital assets.

Source: Comptroller and Auditor General of India, State Finances 2024-25; decadal analysis covering FY 2015-16 to FY 2024-25.