Business Standard

12 states better deficit projections

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Monica GuptaSidhartha New Delhi
From a situation of projecting revenue deficit at the beginning of the year at least four states""Chhattisgarh, Karnataka, Madhya Pradesh and Manipur""have reported revenue surplus at the end of 2004-05, as per the provisional data compiled by them. At least two more states, Gujarat and Delhi, are expected to close the year with a revenue surplus.
 
As per the provisional data submitted by 13 states to the Union finance ministry, 12 states have performed better than the Twelfth Finance Commission's projections on revenue deficit, which is the difference between revenue expenditure and revenue receipts. 
  
MANAGING DEFICIT
Though the revised estimate of the combined revenue deficit of the Centre and the states has risen to 4.1% up from the budget estimate of 3.9%, some states have reported surplus in 2004-05

States 

Revenue surplus                     (Rs cr)

Karnataka2,181
Chattisgarh146
Manipur's68
Madhya Pradesh2,259
 
Similarly, at least nine of these states have reported provisional fiscal deficit that are lower than the budget estimates. For instance, Orissa reported a fiscal deficit (provisional) of Rs 1,257 crore, as against the budget estiamte of Rs 4,070 crore. Similarly, Haryana's provisional fiscal deficit was estimated at Rs 848 crore, compared with the budget estimate of Rs 1,747 crore.
 
While Karnataka has reported a revenue surplus of Rs 2,181 crore during 2004-05, Chattisgarh's revenue surplus was estimated at Rs 146 crore and Manipur's at Rs 68 crore. Madhya Pradesh reported a revenue surplus of Rs 2,259 crore.
 
The numbers for 2004-05 included non-tax revenue of over Rs 2,700 crore received from the Madhya Pradesh State Electricity Board, which was given to it in the previous fiscal as a grant to clear the dues of National Thermal Power Corporation and other central public sector companies resulting in a large revenue surplus, finance ministry officials said.
 
They said while states like Karnataka had fared due to greater fiscal discipline, most states had reported better numbers as they had managed to tide over the higher expenditure requirements due to the implementation of the Fifth Pay Commission recommendations. "The expenditure spike has been taken care of due to growth in revenue," said an official.
 
Officials, however, cautioned against reading too much into the numbers of the other states. "We should wait till the accounts are finalised. The revenue surplus in case of the states with a smaller amount could be on account of some payment that has been deferred," said an official.
 
As per the revised estimates, during 2004-05, the combined revenue deficit of the Centre and the states was estimated at 4.1 per cent of GDP, as against the budget estimate of 3.9 per cent and 5.8 per cent of GDP in 2003-04.The improvement was attributed to higher own tax collection by the states and more grants from the Centre.
 
As per the Reserve Bank of India's Annual Report for 204-05, the gross fiscal deficit was estimated at 8.3 per cent of the gross domestic product in the revised estimates for 2004-05 as against the budget estimate of 7.9 per cent of GDP.
 
The slippage was on account of higher capital outlays, particularly for irrigation.
 
During 1990-91, the combined fiscal deficit was estimated at 9.4 per cent of GDP and fell to 6.26 per cent in 1996-97 before the northwards movement from 1997-98, when it was estimated at 7.16 per cent of GDP. It reached a high of 9.9 per cent of GDP in 2001-02.
 
To a large extent the Fifth Pay Commission's recommendations were responsible for the higher deficit in the late 1990s and in the first two years of this decade.

 

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First Published: Sep 30 2005 | 12:00 AM IST

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