Bihar Posts Revenue Surplus After Five Years, But Audit Flags ₹3,158 Crore In Misclassified Spending
The Indian state of Bihar posted a revenue surplus of ₹2,833.06 crore in the financial year 2023–24 -- its first in five years -- according to the State Finances Audit Report released by the Comptroller and Auditor General (CAG) of India.
The CAG noted that the revenue surplus was achieved through a combination of higher revenue receipts, improved tax collections, and restrained growth in revenue expenditure.
“The excess of revenue receipts over revenue expenditure in 2023–24, led to the state realizing a revenue surplus of ₹2,833.06 crore,” the report stated (Executive Summary, Page viii).
However, the CAG simultaneously flagged concerns over the reliability of these numbers, citing ₹3,158 crore in capital expenditure misclassified under revenue heads.
This incorrect categorization affects the accuracy of the revenue surplus calculation and distorts Bihar’s fiscal profile.
“Misclassification of expenditure between revenue and capital has a direct bearing on key fiscal indicators such as the revenue surplus and fiscal deficit,” the CAG reported in Chapter IV (Section 4.8, Page 124).
The audit further observed that capital expenses, including those related to infrastructure development and asset creation, were booked under “Grants-in-Aid” -- a revenue expenditure item.
Such practices can overstate the surplus by reducing reported revenue expenses.
This is not the first time such misclassification has occurred. The report noted that similar deviations had been observed in earlier fiscal years.
This raises concerns about the consistency and transparency of the state’s financial reporting practices.
In terms of debt, the state’s fiscal deficit stood at ₹35,659.88 crore, or 4.17% of GSDP — exceeding the Bihar Fiscal Responsibility and Budget Management (BFRBM) limit of 3.5%.
Total outstanding liabilities reached 38.94% of GSDP (Section 1.4.1, Pages 11–13), just below the ceiling set by the 15th Finance Commission.
Despite these breaches, the CAG acknowledged Bihar’s efforts to improve its fiscal performance through increased capital outlay and higher devolution of Union taxes.
State’s own tax revenue also grew by 9.87% compared to the previous year (Section 2.4, Page 21).