New Delhi, June 26 -- Social welfare spending by 18 of India's largest states is expected to remain elevated at around 2% of their gross state domestic product (GSDP), or approximately Rs.6.4 trillion, in FY26, Crisil Ratings said in a report on Thursday.

According to the rating agency, these states, including Maharashtra, Gujarat, Karnataka, Tamil Nadu, and Uttar Pradesh, together account for nearly 90% of the country's aggregate GSDP.

However, the persistence of high welfare expenditure, supporting developmental goals, may lead to an elevated revenue deficit, thus curbing the financial flexibility of states to expand capital spending, the report warned.

The spending of the states, based on budget estimates for the current fiscal, is ...