Both the print media and some commentators on the Indian economy are convinced that the finances of states are not that well managed and, indeed, that the states are drowning in debt. By and large, this is not true. Since the recommendations of the XIIth Finance Commission came into force, which provided for consolidation and write off of certain amounts of state debt, subject to rigorous conditionalities, the outstanding debt of most states has improved. Today, many are nearer the XIIth F