(a) whether RBI has pointed out in-his study `State Finance a study of Budgets of 2001-02`
that expenditure reduction has ,been a major constraining problem for States as high proportion of tl)
is expenditure is committed in nature - salaries, pension payments and interest payments; and
(b) if so, the reaction of the Government there for?
THE MINISTER OF STATE IN THE MINISTRY OF FINANCE (9HRI GINGEE N. RAMACHANDRAN) :
(a) Yes, Sir.
(b) State Governments are autonomous under the Constitutioo of India and financial
management of the States is primarily the responsibility of the State
Governments. State Governments take measures of their
preference from time to time to improve their finand
status. Government of India, in pursuance of the
recommendation of the Eleventh Finance Commissiol has created a
`Fiscal Reforms Facility (2000-01 to 200, 05)` with an incentive fund of
Rs. 10,608 crore. Undl this facility, States have been invited to draw their Mediu
Term Fiscal Reforms Programmes aimed at, inter ali ,fiscal consolidation. Fiscal
measures adopted by Ih State Governments include improving tax and non-tax
receipts, reprioritisation of expenditures, targeting and
phasing out non-merit subsidies. If the trend of improvemen
suggested for the States continues,. the State sector as a whole is expected to
come into a revenue balance by 2005-06.