{"id":290415,"date":"2024-04-12T19:02:21","date_gmt":"2024-04-12T13:32:21","guid":{"rendered":"https:\/\/forumias.com\/blog\/?p=290415"},"modified":"2024-04-12T19:02:21","modified_gmt":"2024-04-12T13:32:21","slug":"decoding-state-budgets","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/decoding-state-budgets\/","title":{"rendered":"Decoding State Budgets"},"content":{"rendered":"

Source<\/strong>-This post on Decoding State Budgets <\/strong>has been created based on the article \u201cDecoding state budgets: Can growth projections keep pace with reality?<\/strong>\u201d published in \u201cThe Indian Express<\/strong>\u201d on 12 April 2024.<\/p>\n

UPSC Syllabus- GS Paper 3 <\/strong>– Government Budgeting<\/p>\n

Context <\/strong>– In India, the central government’s finances are closely examined whereas state governments’ fiscal health often receives less attention. However, there is a renewed interest in the financial status of states because of the rise in market borrowing by state governments.<\/p>\n

What is the publicly available information on state government finances?<\/strong><\/h2>\n

1) State Budgets <\/strong>-They are a good source of publicly available information on state government finances.<\/p>\n

2) CAG<\/strong> \u2013There is publication of monthly fiscal indicators by the CAG. This is useful in assessing emerging trends in state finances.<\/p>\n

3) Other important source <\/strong>– They are states\u2019 usage of ways and means advances and overdraft facilities extended by the Reserve Bank of India.<\/p>\n

What is the analysis of the 2024-25 budgets or votes on account (VoA)?<\/strong><\/h2>\n

An analysis of the data suggests that states expect a 9.2 % growth in their combined revenue receipts this year.<\/p>\n

1) Revenue side of states<\/strong>–<\/p>\n

A) About half of the total income for states comes from their own taxes.<\/p>\n

B) Another 40-45 per cent of the revenues of the states comes from transfers by the Centre, taxes and grants. States saw an increase in their revenues due to higher-than-expected tax sharing for three years in a row during FY2022-24.<\/p>\n

2) Expenditure sides of states- <\/strong><\/p>\n

States plan to increase their revenue spending by 7% and their capital spending by 11%. However, due to elections this year, there will be less capital spending by states till final budget is presented in July 2024.<\/p>\n

What are the issues with grants from the Centre to the states?<\/strong><\/h2>\n

1) Uncertainty in transfer of additional devolution<\/strong>– In many cases, states may have deviated from their planned borrowing because they had no prior knowledge about the timing of inflow of such additional devolution by Centre.<\/p>\n

2) Multiple factors<\/strong>– There are many factors on which center gives grants to states for Centrally Sponsored Schemes (CSS). For ex- submitting utilization certificates. Thus, actual grants from the Centre to the states differ a lot from what the states expect.<\/p>\n

Read more- Fiscal Centralisation In India<\/a><\/p>\n

What is the reason behind larger market borrowing by states?<\/strong><\/h2>\n

1) States may have preferred to hold larger cash before the model code of conduct period, driving some states to expand their borrowings.<\/p>\n

2) Some states may have decided to utilize more of their borrowing limit for 2023-24 before the year ends.<\/p>\n

Question for practice<\/strong><\/p>\n

What are the issues with grants from the Centre to the states? How can it lead to a larger market borrowing by the states.<\/p>\n","protected":false},"excerpt":{"rendered":"

Source-This post on Decoding State Budgets has been created based on the article \u201cDecoding state budgets: Can growth projections keep pace with reality?\u201d published in \u201cThe Indian Express\u201d on 12 April 2024. UPSC Syllabus- GS Paper 3 – Government Budgeting Context – In India, the central government’s finances are closely examined whereas state governments’ fiscal… Continue reading Decoding State Budgets<\/span><\/a><\/p>\n","protected":false},"author":10320,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[216,8184,10500],"class_list":["post-290415","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-gs-paper-3","tag-indian-economy","tag-indian-express","entry"],"jetpack_featured_media_url":"","views":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/290415","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10320"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=290415"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/290415\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=290415"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=290415"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=290415"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}