Increasing reliance on own revenue sources 'salutary'

RBI report on state finances during the financial year 2003-04

The Reserve Bank of India (RBI) today said the emerging trend towards increased reliance on states' own sources of revenue generation augurs well for fiscal consolidation.

The states' budgets for 2003-04 envisage continued efforts towards fiscal consolidation through augmentation of revenue and containment of expenditure.

In its report on 'State Finances : A Study of Budgets of 2003-04', the central bank pointed out that the growth rate of 13.7 per cent in the states' revenue receipts envisaged in the budget estimates for 2003-04 was premised on the higher growth rates in states' own revenue receipts.

In the preceding year (2002-03), revenue receipts recorded an increase of 15 per cent mainly due to higher growth in the States' own taxes and grants from the Centre.

The budget estimates of revenue receipts for 2003-04 are inclusive of additional resource mobilisation proposed through tax revenue measures (Rs 2,404 crore) and non-tax revenue measures (Rs 170 crore).

Total tax receipts comprising states' own taxes and states' share in central taxes at Rs 2,29,313 crore would be higher by 13.2 per cent than the revised estimates for 2002-03.

The gross transfers from the Centre in the form of States' share in central taxes, grants and loans from the Centre (excluding States' share in small savings collections) are budgeted higher at Rs 1,60,111 crore in 2003-04, an increase of 11.9 per cent over the revised estimates for 2002-03.

Aggregate receipts in 2003-04 comprising revenue and capital account of States are budgeted to be higher by 10 per cent over the previous year. Revenue receipts would account for 92 per cent of the increase in aggregate receipts, while the balance would emanate from capital receipts.

Revenue receipts would account for 12.2 per cent of GDP in 2003-04 as compared with 11.9 per cent in the previous year. The share of revenue receipts in the aggregate receipts is budgeted to increase from 67 per cent in 2002-03 to 69 per cent in 2003-04.