Vision Ias

Recently, the Reserve Bank of India published an annual report titled “State Finances: A
Study of Budget of 2023-24”. The theme of the Report is ‘Revenue Dynamics and Fiscal
Capacity of Indian States’.

TRENDS IN DEFICIT

1)Gross FD steadily increased in the past five years.

AGGREGATE RECEIPTS

1)States own taxes like SGST, Excise duty on alcohol, Stamp duty etc.

No consistency is observed in states' taxes.

Out of the sources for own taxes sales tax is highest.

2)Non tax revenue.

Sources include interest payment and fees for Economic services like licenses for mining
and royalty.

STATE'S EFFORT TO IMPROVE REVENUE

States are sovereign because they get power from the constitution, so the product they
have power to tax they can also levy cess.

Cess is always done for a particular purpose.

A high debt-to-GDP ratio will lead to a crowding-out effect.

VERTICAL TAX DEVOLUTION

The Centre is not collecting most of the money as tax, But as cess.

HORIZONTAL DEVOLUTION WEIGHTS

Need

Fiscal disability

Equity

Efficiency.
15th FC did not take into account infrastructure.

PUBLIC DEBT (07:03 PM)

DEBT PROFILE OF THE GOVERNMENT

Component Internal and External.

Under Internal -

Marketable and Non-marketable securities.

Under marketable -Dated securities, Treasury bill, Cash management bills.

Under Non Marketable -NSSF securities.

External debt again we have two sources: External assistance windows- Like IBRD, and IDA
and Bilateral sources like Russia, Germany and Japan.

Other sources include

1)IMF-SDR.

2)Defence debt

3)FII in Gsecs.

TRENDS

Non-marketable debt has risen.

Public Debt denotes liabilities payable by the Central Government, which are contracted
against the Consolidated Fund of India, as provided under Article 292 of the Constitution of
India.

Current Status of Public Debt in India:

Central Government’s Public Debt stood at 57.1 % of GDP as of the end of March 2023.
General Government Debt was 81% of GDP in 2022-23.

General Government Debt represents the indebtedness of the Government sector (Central,
State Governments and UTs with legislature).

Internal Debt constituted 94.6 % of Public Debt at end-March 2022.

Currency composition: Max debt taken in US $ and second is Indian Rupees.

The topic for the next class: PLFS