FM asks states to take up steps on fiscal correction
Regretting that fiscal correction has not been uniform across the states last fiscal, Finance Minister P Chidambaram on Wednesday asked them to take steps to augment revenue, rationalise expenditure reforms and contain debt within the sustainable ...
By PTI |
NEW DELHI: Regretting that fiscal correction has not been uniform across the states last fiscal, Finance Minister P Chidambaram on Wednesday asked them to take steps to augment revenue, rationalise expenditure reforms and contain debt within the sustainable limit over the medium term.
Addressing Parliamentary Consultative Committee attached to his ministry, he said pension liability of states too was mounting and that could be contained only through long term structural reforms.
Many states showed improvement in revenue deficit and fiscal deficit, but only a few of them accounted for a major part of overall correction, he said.
Five states have already contained fiscal deficit to below three per cent of their respective gross domestic product and nine states have revenue deficit less than one per cent to their GDP.
However, the process of fiscal correction should not adversely impact capital expenditure and spending on social services, Chidambaram said.
ADVERTISEMENT
The correction has to be gradual and steady, he said, adding that any fiscal correction path under the fiscal responsibility legislation has to be realistic.The strategy for revenue maximisation needs to provide for necessary flexibility to shift the pattern of expenditure and redirect it to productive assets, he said.
The revised estimates for 2005-06 reflect strong commitment by states to reduce existing fiscal imbalances as evidenced by discernible corrections in the level of Gross Fiscal Deficit (GFD), he said.
Download
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
Download
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
ADVERTISEMENT
