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States' game plan

BS Bureau

The states' couldn't have asked for more. The Eleventh Finance Commission (EFC) recommendations have resulted in the net resource transfer to states shooting up by 14.4 per cent to Rs 1157.66 billion. The states' response to the Centre's largesse however, has been dismal.

The revenue receipts of states showed a shortfall of Rs 53.44 billion over the budget estimates of Rs 2201.54 billion for 1999-2000.

Expenditure on the other hand continued to remain under intense pressure due to a persistent rise in wages and salaries. It actually exceeded the budget estimates in 1999-2000 by Rs 143.48 billion.

The fiscal deficit of states, thus, went up to 4.9 per cent of GDP or Rs 947.39 billion in 1999-2000 from 4.2 per cent in the previous year.

Sinha, has earmarked a Rs 106.07 billion corpus for an Incentive Fund to encourage states to implement monitorable fiscal reforms.

He has also passed on the benefit of reduction in interest rates on small savings deposits to them which will cut their borrowing costs by 100 to 150 basis points. He also said that the Centre will endeavour to reform their finances.

While he stated unequivocally that the reforms will essentially be the states' own programmes, he said considerable flexibility has been provided for states to design their reform programmes. Sinha has done his bit for the states. It's now for the states to take up their own cause.

Source: Business Standard

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