State Finances: Revenue Expenditure Is The Hurdle

In view of the expenditure due to salaries, pension and interest payments, states cut non-committed expenditure, seen in the falling share of developmental expenditure

Non-Plan revenue expenditure is expected to go up 16 per cent between the Ninth and Tenth five-year Plans. Non-development expenditure is slated to rise 23 per cent, as against an 8 per cent rise projected in the case of development expenditure.

Expenditure compression is a major problem with states in view of the high proportion of committed expenditure such as salaries, pension and interest payments. States, therefore, end up cutting non-committed expenditure, reflected in the declining share of developmental expenditure.

At 2000-01 prices, Pondicherry has projected the sharpest hike in development expenditure at 28 per cent, followed by Haryana with a 26 per cent jump. Karnataka is expected to raise such expenditure by 22 per cent. However, development expenditure is slated to fall 38 per cent in Bihar, 20 per cent in Orissa and 17 per cent in Maharashtra.

Among the special category states, Tripura is slated to increase developmental expenditure by 32 per cent in the next Plan period.

Within the broad category of non-development expenditure, states