New Delhi, Aug. 11 -- Tamil Nadu has recently appointed a committee headed by economist Montek Singh Ahluwalia to recommend ways to increase state government revenues, which includes taxes as well as other levies.

Maharashtra has slashed the number of women who were getting money from its cash transfer scheme. Four out of every ten beneficiaries have been dropped from the list of beneficiaries, or an estimated 9.2 million women.

Such instances are hopefully indicative of broader attempts by state governments to do something about their deteriorating finances.

Here is the big picture to provide context. Data on state finances collated by the Reserve Bank of India (RBI) shows that the aggregate fiscal deficit of Indian states as a percen...