(a) whether the overdraft position of all State Governments
worsened considerably during the current year and their
accounts were frozen by the Reserve Bank of India leading to
closure of treasuries for a few days;
(b) if so, the State-wise details thereof; and
(c) the main reasons for worsening of the financial position
in Gujarat and in what way the Union Government propose to
help the Gujarat Government?
FINANCE MINISTER IN THE MINISTRY OF FINANCE (SHRI YASHWANT SINHA)
(a) to (c): A statement is laid on the Table of the House.
Statement referred to in reply to parts (a) to (c) of the
Lok Sabha Starred Question No. 749 for answer on 17.05.2002
regarding Overdrawals by States.
(a) & (b) : Some State Governments have been facing temporary
mismatch in their receipts and expenditure resulting in their
going into overdraft with RBI.
The transaction between a State and RBI is conducted as per
an agreement between the two. It is a matter of relationship
between the banker and the client (between RBI and the State
Government); such information is not published/made public.
(c) Rising mismatch between revenue receipts and revenue
expenditure has resulted in imbalances in the cash position
of States. Rising non-plan revenue expenditure, heavy debt
burden, inter-alia, are factors contributing to the fiscal
stress of State Governments.
In the case of Gujarat, Government of India had released in
advance entitlements amounting to Rs.150 crores and Ways &
Means Advance of Rs.641crores during 2000-01 and 2001-02.
Following the earthquake, the Central Government released
Rs.1467.37 crores under the National Calamity Contingency
Fund for immediate relief and rehabilitation. An amount
of Rs.750 crores was released to the State during 2001-02
as non-plan grant. Besides, Government of Gujarat have
been allowed additional market borrowings in lieu of tax
free earthquake relief bonds amounting to Rs.1500 crores
during 2001-02 and 2002-03. The RBI had also relaxed the
Ways & Means Regulation Scheme and Overdraft Regulation
Scheme till end April 2001. The Government of India has
also negotiated World Bank Assistance under the Gujarat
Earthquake Emergency Relief and Rehabilitation project
and ADB assistance to rebuild earthquake hit Gujarat.
To supplement the efforts of the State Government to meet
temporary cash imbalance, the Government of India assists
the State Government through feasible advance releases of
their entitlements and through ways and means advance.
For fiscal consolidation, the Government of Gujarat have
been enjoined to draw up their monitorable fiscal reform
programme aimed at improving its financial position in the
medium term in terms of the States` Fiscal Reforms Facility
2000-01 to 2004-05, in pursuance of the recommendations of
the Eleventh Finance Commission.