CDS-KNRaj Library

Updates from K.N. Raj Library, CDS, Thiruvananthapuram

STATE FINANCES:A STUDY OF BUDGETS OF 2011-12

Posted | on April 2, 2012 | by Gopakumar | Comments Off

Published by Reserve Bank of India , March 2012

The State government budgets for 2011-12 proposed to carry forward the fiscal correction process by focusing more on expenditure control against the backdrop of roll back of fiscal stimulus measures and tapering off of the impact of the Sixth Pay Commission award. All States, barring one, amended their Fiscal Responsibility and Budget Management (FRBM) Acts/Rules, in line with the Thirteenth Finance Commission (ThFC) recommendation, with the aim of eliminating revenue deficits and bringing about graduated reductions in fiscal deficit and debt levels latest by 2014-15.

The Study also highlights several issues of significance and concern for the State Governments. Although all the States except Goa have amended their FRBM Acts/Rules, most of them do not include provisions for additional disclosures for enabling transparent assessment of State finances. The recommended restructuring of the public expenditure system would enable better management of outlays for effective outcomes. Successful restructuring of the public expenditure management system would, however, call for appropriate assimilation of the new system across the government machineries at all levels including the Planning Commission, the Central and the State governments. The rationalisation of the operation of Centrally Sponsored Schemes is expected to address the issues of lack of flexibility in these schemes, counterpart funding shortage from States and low utility of large number of schemes with thinly spread resources at the field level. The financial losses of State power utilities continue to be a drag on State finances which necessitate not only renegotiating debt liabilities of distribution utilities but also undertaking necessary reforms to enable independent functioning of State Electricity Regulatory Commissions and to address issues relating to periodic tariff revisions. As part of fiscal transparency initiatives, the State governments need to ensure that their finances capture both explicit and implicit liabilities associated with certain off-budget activities, including project financing undertaken through SPVs/public-private partnership mode. There is also need for greater focus on structural issues confronting State finances, particularly for those States that could not undertake rule-based fiscal corrections prior to the crisis years of 2008-09 and 2009-10.

URL: http://rbidocs.rbi.org.in/rdocs/Publications/PDFs/STF30032012.pdf

Courtesy:RBI

Category: Budget, Finance, India, Land development, State Budgets, state finances

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