Emerging issues in state finances post-fourteenth finance commission : state level debt-deficit dynamics - emerging issues
Date
2019
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Abstract
The Fourteenth Finance Commission (FFC) prescribes the conditions for enhanced borrowing limits of States in India. FFC debt-deficit dynamics can be analyzed in two ways: ex-ante and ex-post. The analysis of outstanding debt and deficits of all States ex-post to FFC period in the first year of assessment (2015-16) revealed that only five States – Jharkhand, Karnataka, Madhya Pradesh, Odisha and Sikkim, have successfully managed the Fiscal Responsibility Act (FRA) thresholds of deficits. Fiscal consolidation at the state level under the new framework of borrowing proposed by FFC should focus on quality of expenditure and elimination of revenue deficit.
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Policy Brief
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Keywords
FISCAL POLICY, FINANCIAL POLICY, ACCOUNTABILITY, DEBT, DEFICIT, ECONOMIC ANALYSIS, INDIA, SOUTH ASIA