Centre, state finances in the pink of health

The macro-economic review released by the Reserve Bank of India (RBI) on the eve of the mid-term monetary policy review has shown a further strengthening of central and state government finances.

While the key deficit indicators are budgeted to decline over the revised estimates for 2007-08, the improvement in the combined central and state government finances is primarily due to strong state finances.

While the combined revenue deficit for the state and central governments is likely to come down from 0.9 per cent in 2007-08 to 0.5 per cent in 2008-09, the gross fiscal deficit may figure at 5.3 per cent as against 4.6 per cent in 2007-08.
 

NUMBER GAME
	7-Jun	07-08 (RE)

08-09 (BE) Revenue deficit1.91.41 Fiscal deficit3.53.12.5 Figures as % of GDP       RE: Revised estimates; BE: Budget  estimates

The central government has borrowed an additional Rs 51,500 crore over and above the notified amount till October 14, 2008, in the current financial year.

The central government resorted to ways and means advances (WMA) twice for 16 days in the current financial year till October 14 compared with 91 days last year. WMA is an overdraft facility where the government borrows money from RBI to pay it back within seven days, over and above which it attracts a penal rate of interest during repayment.

Up to October 14, 2008, 11 state governments and the Union Territory of Puducherry raised a total amount of Rs 17,896 crore from the market as against Rs 20,362 crore last year. WMA advances to states stood at Rs 930 crore compared with Rs 1,208 crore a year ago.

The cash surplus position of the states, as reflected through their investments in treasury bills during April- September 2008, amounted to Rs 82,382 crore compared with Rs 72,805 crore for the corresponding period last year. The cash surplus position with the states as on October 13, 2008, was Rs 69,507 crore compared with Rs 66,141 crore a year ago.