Archive · 23 Dec 2025
States rush spending in fiscal year's final months
State governments in India tend to spend a lot of money in the last two months of the fiscal year, which is February and March.
This is because they want to finish projects and pay bills before the year ends to avoid losing money.
This rush in spending causes money problems and makes states borrow money quickly.
A report says that states should spread out their spending more evenly throughout the year to avoid these problems.
The report also mentions that states are using up their usual borrowing options and have to use other ways to get money when they need it quickly.
State governments rush spending in February and March to avoid lapse of funds.
This rush in spending causes liquidity pressures and leads to short-term borrowing.
States are using up their usual borrowing facilities and resorting to overdraft mechanisms.
The report recommends smoother intra-year expenditure calibration to reduce reliance on temporary borrowing.
The sharp spike in capital expenditure in the final months intensifies the liquidity pressures.
- Who
- State governments
- What
- Rush spending in the final months of the fiscal year
- When
- February and March
- Where
- India
- Why
- To avoid lapse of funds and expedite project execution
- Expenditure Pattern
- Back-loaded concentration, surging in February and March
- Driving Factors
- Flow of funds from schemes, clearing pending bills
- Impact
- Intensifies liquidity pressures, leads to short-term borrowing
- Borrowing Facilities
- Special drawing facilities, ways and means advances
- Report Recommendation
- Smoother intra-year expenditure calibration