Income support, UDAY driving fiscal slippages: RBI
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  1. The Reserve Bank has warned of the rising risks to fiscal consolidation of the states as their finances are burdened with (a)farm loan waivers (b)income support schemes and (c)UDAY bonds for their power distribution companies.
  2. These remarks were made during a meeting between the members of the 15th Finance Commission and the RBI members.
  3. Further,other issues raised by RBI included (a)necessity of setting up state finance commissions (b)public sector borrowings (c)continuity of finance commission and (d)development of expenditure codes especially given that expenditure norms vary from State to State.
  4. The Ujwal Discom Assurance Yojana(Uday) was launched in 2015.It envisaged state governments taking over 75% of the utilities debts,thus reducing the interest burden on the discoms.In turn,the discoms were to improve their financial and operational parameters and become more efficient.
  5. The Finance Commission is constituted by the President under Article 280 of the Constitution mainly to give its recommendations on distribution of tax revenues between the Union and the States and amongst the States themselves.
  6. The Commission is appointed every five years.It consists of a Chairman and four other members.The Chairman of the 15th finance commission is chaired by N. K.Singh.Its recommendations will cover the five year period commencing from 1st April,2020.

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