States' debt in India is expected to reach ₹94.4 lakh crore by March 2025, comprising 32.7% of GSDP, and to further climb to ₹103.6 lakh crore by FY26, driven by capital expenditure and a growing revenue deficit according to a CareEdge Ratings report. Fiscal deficit is anticipated to decline to 2.7% of GSDP in FY25.