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While the Centre is struggling to bring its fiscal deficit to three per cent of GDP and has pushed the original plan to do so by nine years, a number of states which have presented their budgets recently are already achieved this target -- reining in a gap between their expenditure and receipts to three per cent of gross state domestic product (GSDP).
The original plan by the Centre under the Fiscal Responsibility and Budget Management Act was to rein in its fiscal deficit to three per cent by 2007-08. However, later it was deferred by a year to 2008-09. In 2008-09, the budget had estimated fiscal deficit of the Centre to be 2.5 per cent, but the deepening of global financial crisis by the collapse of US financial services icon disturbed the plan. As the Centre gave a booster dose costing the exchequer over Rs 1.8 lakh crore, its fiscal deficit touched six per cent that year.
It never came down to three per cent after that. Now the new five-year fiscal consolidation plan by Finance Minister P Chidambaram targets to reduce the Centre's fiscal deficit to three per cent of GDP by 2016-17, the terminal year of the 12th five year plan.
In contrast, see the progress of some states. Gujarat which had targeted to cut its fiscal deficit to three per cent of its GSDP in 2008-09 achieved the feat in 2006-7.
Its another goal to have zero revenue deficit by 2007-08 was also achieved a year earlier.
On the other hand, the Centre had planned to have zero revenue deficit in 2007-08, it was deferred by a year earlier. Realizing that it is difficult to have zero revenue deficit, it came out with a new concept of effective revenue deficit. The new deficit is a revenue deficit sans capital expenditure given in assistance to states. This deficit is now projected to come down to zero per cent by 2015-16. Revenue deficit is targeted to be two per cent by then.
Besides Gujarat, Madhya Pradesh, Odisha, Bihar and West Bengal presented their budgets for 2013-14. Of these, first
three states already have their fiscal deficits lower than three per cent of their GSDPs.
Bihar also has its fiscal deficit lower than three per cent, though it is inching towards three per cent. Its revenue deficit is, however, yet to come to zero per cent.
West Bengal also had its fiscal deficit lower than three per cent of GDP by 2012-13 (Budget Estimatee). However, it is in revenue deficit stage at 1.10 per cent in 2012-13.
However, given state finances and its demand for moratorium of interest repayment on loans given by the Centre, the performance is quite noteworthy.
| Fiscal and Revenue Balance of Centre and States: | ||||
| 2011-12 | 2012-13 | 2013-14 | ||
| Centre-- fiscal balance | (-)5.7 (actual) | (-)5.2 (RE) | (-)4.8 (BE) | |
| Revenue balance | (-)4.4 (actual) | (-) 3.9 (RE) | (-) 3.3 (BE) | |
| Gujarat-fiscal balance | (-)2.16 (RE) | (-)2.63 (BE) | (-) 2.57 (BE) | |
| Revenue balance | 0.32 (RE) | 0.53 (BE) | 0.58 (BE) | |
| Madhya Pradesh--fiscal balance | (-) 1.86 (actual) | (-) 2.90 (RE) | (-) 2.98 (BE) | |
| Revenue balance | 3.14 (actual) | 1.79 (RE) | 1.27 (BE) | |
| Odisha--fiscal balance | (-) 2.79 (BE) | (-) 1.83 (BE) | 2.03 (BE) | |
| Revenue balance | 0.03 | 0.93 | 0.65 | |
| Bihar--fiscal balance | (-) 2.31 (actual) | (-) 2.87 (BE) | (-) 2.79 (BE) | |
| Revenue balance | 1.91 (actual) | 2.69 (BE) | 2.17 (BE) | |
| West Bengal--fiscal balance | (-) 3.94 (RE) | (-) 2.51 | ||
| Revenue balance | (-) 3.14 | (-) 1.10 | ||
BE: Buddget Estimate
RE: Revised Estimate
Figures are given as %age of GDP for the Centre and %age of gross domestic product of concerned state
Source:
Budget papers and papers laid out in Parliament and assemblies as part of the Fiscal Responsibility and Budget Management (FRBM) Acts
