States in India play a crucial role in economic growth and human development. This article discusses the challenges faced by states in managing their finances and achieving regional equity. It highlights how states with abundant resources often lag behind due to inadequate compensation. The key to balanced development lies in effective fiscal management by both the central government and individual states. By analyzing federal-state finances, the article shows how fiscal policies impact inter-state disparities. To ensure sustainable growth, it is essential for all states to raise revenues and manage resources efficiently. This research is valuable for students, policymakers, and organizations working towards inclusive development.