The Reserve Bank of India brings out a report as an annual publication entitled State Finances: A Study of Budgets , which analyses the fiscal position of State governments on the basis of primary disaggregated State-wise data. From 2005-06 onwards, the report has been structured around a special theme of topical relevance. This report’s theme is ‘Quality of Sub-national Public Expenditure’.
The highlights of the report are:
- The quality of expenditure is key to sub-national level fiscal consolidation to reap efficiency and welfare gains while smoothing the effects of fiscal adjustment.
- Empirical analysis indicates that expenditure on social and physical infrastructure can have growth augmenting effects.
- The quality of expenditure of most Indian States has been improving following the enactment of fiscal responsibility legislations.
- States need to prioritise expenditure on physical and social infrastructure and economise on nonessential heads.
- From a medium term perspective, enduring improvements in the quality of States’ finances hinges around the revival of State level public enterprises (SLPEs), improving the viability of Discoms and rationalisation of centrally sponsored schemes.
This report has been prepared by the Fiscal Analysis Division (FAD) of the Department of Economic and Policy Research (DEPR). Support was received from the regional offi ces of DEPR, other departments of the Reserve Bank (Department of Government and Bank Accounts and Internal Debt Management Department), finance departments of State Governments and Union Territories, the Ministry of Finance, Government of India, and the Office of the Comptroller and Auditor General (CAG) of India. This report is also available on the website (www.rbi.org.in).
Feedback/comments are solicited to help improve the analytical or informational content of the report. These may be sent to the Director, Fiscal Analysis Division, Department of Economic and Policy Research, 6thFloor, Amar Building, Reserve Bank of India, Shahid Bhagat Singh Road, Mumbai 400 001 or through email at [email protected]
Michael Debabrata Patra
March 31, 2016