StatsGuru: States' fiscal challenges versus electoral compulsions

The promises, if implemented, will aggravate public finances to varying degrees in these states, depending on the parameters chosen

Political parties in four states and a Union territory — West Bengal, Assam, Tamil Nadu, Kerala and Puducherry — have announced ramping up welfare pitches in the runup to Assembly elections next month. Promises in Tamil Nadu range from free liquefies petroleum gas (LPG) cylinders to household appliances; West Bengal is focusing on doorstep delivery of services; Kerala is offering expanded schemes such as free bus travel for women; and Assam is leaning on public employment commitments. These promises, if implemented, will aggravate public finances to varying degrees in these states, depending on the parameters chosen.

 

In Assam, Puducherry and West Bengal, the share of revenue expenditure in gross state domestic product (GSDP) has remained elevated even in recent years. (Chart 1) 

 

Assam and Kerala have been spending much of their revenue expenditure on committed areas — salaries, pension and interest. (Chart 2) 

 

Tamil Nadu’s spending on subsidy in proportion to its revenue expenditure is the highest, thanks to the state’s various social welfare schemes. (Chart 3) 

 

The share of capital outlay in GSDP has been consistently highest in Assam, despite high revenue expenditure and committed liabilities within that. (Chart 4) 

 

As regards fiscal deficit, while Kerala and Assam have breached the threshold of 3-3.5 per cent of GSDP, others are not too far even on revised estimates. However, their figures are still lower than the Centre’s fiscal deficit. Puducherry is much better placed than others. (Chart 5) 

 

 

West Bengal's debt has been the highest among the five states. Kerala is close behind. (Chart 6)