States to become revenue surplus in 2007-08: RBI
States have become richer due to increasing tax revenue and larger flow of funds from central govt and may become revenue surplus during '07-08 after a gap of 20 years, RBI said in a study.
By PTI |
MUMBAI: States have become richer due to increasing tax revenue and larger flow of funds from the Union Government and may become revenue surplus during 2007-08 after a gap of 20 years, the Reserve Bank said in a study.
"There has been a marked improvement in the fiscal position of state governments in recent years in terms of key deficit indicators," a RBI study on state finances said.
It pointed out that state governments in 2007-08, as indicated by their budgets, are slated to become revenue surplus after a gap of two decades. They would account for 0.3 per cent of the GDP, the study said.
Attributing the improvement in fiscal position of state governments to higher tax realisation and larger share in central taxes, the RBI study said "increase in revenue receipts...was higher than increase in revenue expenditure."
Many states have committed to carry forward the process of fiscal correction and consolidation, the study said, adding that "as a consequence of the budgeted revenue surplus, the Gross Fiscal Deficit (GFD) is budgeted to decline to 2.3 per cent of the GDP in 2007-08."
It further said that higher devolution and transfers from the Centre coupled with the incentives provided by the 12th Fiance Commission (TFC) have helped states in undertaking fiscal correction and consolidation.
The study, however, pointed out that there were wide variations across the states, notwithstanding the marked improvement in consolidated fiscal position of the states.
"There has been a marked improvement in the fiscal position of state governments in recent years in terms of key deficit indicators," a RBI study on state finances said.
It pointed out that state governments in 2007-08, as indicated by their budgets, are slated to become revenue surplus after a gap of two decades. They would account for 0.3 per cent of the GDP, the study said.
Attributing the improvement in fiscal position of state governments to higher tax realisation and larger share in central taxes, the RBI study said "increase in revenue receipts...was higher than increase in revenue expenditure."
Many states have committed to carry forward the process of fiscal correction and consolidation, the study said, adding that "as a consequence of the budgeted revenue surplus, the Gross Fiscal Deficit (GFD) is budgeted to decline to 2.3 per cent of the GDP in 2007-08."
It further said that higher devolution and transfers from the Centre coupled with the incentives provided by the 12th Fiance Commission (TFC) have helped states in undertaking fiscal correction and consolidation.
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The study, however, pointed out that there were wide variations across the states, notwithstanding the marked improvement in consolidated fiscal position of the states.
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