Bud­get to keep eye on states’ fis­cal health

The Times of India (New Delhi edition) - - Times Global - TIMES NEWS NET­WORK

New Delhi: When fi­nance min­is­ter Nir­mala Sithara­man gets down to pre­par­ing her sec­ond Bud­get, she will keep an eye not just on the Cen­tre’s fis­cal sit­u­a­tion but also the con­di­tion in states, some of which have been bor­row­ing heav­ily from the mar­ket and are also sit­ting on funds.

“The Cen­tre needs to look at the com­bined fig­ure and not just the 3.3% that it has bud­geted for. Only then can we take a holis­tic ap­proach,” said a source, adding that an at­tempt will also be made to clean up the off-Bud­get items. Af­ter all, global in­vestors and rat­ing agen­cies keep an eye on the con­sol­i­dated fis­cal deficit of a coun­try and do not limit their de­ci­sions to the Cen­tre’s fi­nan­cial health alone.

Sources said that some of the states have been putting pres­sure on the RBI to let them tap the mar­ket to raise money even if they had suf­fi­cient re­sources at their dis­posal. In fact, sev­eral of them are sit­ting on funds that has been re­leased by the Cen­tre un­der var­i­ous heads. In any case, economists have been com­plain­ing about the states be­ing lazy in rais­ing own tax rev­enue in re­cent years and, with the Cen­tre of­fer­ing to com­pen­sate them in case GST col­lec­tions grow at un­der 14%, the state ma­chin­ery is not suf­fi­ciently en­cour­aged to raise re­sources and plug leak­ages.

But the prob­lem of sit­ting on idle funds is not lim­ited to the states — even cen­tral min­istries fol­low a sim­i­lar ap­proach, of­ten re­fus­ing to share data with the fi­nance min­istry. North Block has now made it clear that it will only re­lease funds if the ear­lier money was utilised.

Dur­ing re­cent con­sul­ta­tions, the fi­nance min­istry has also asked the min­istries and pub­lic sec­tor com­pa­nies linked to them to en­sure that there is ad­e­quate cap­i­tal ex­pen­di­ture.

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