State governments should focus greater fiscal transparency for proper assessment of fiscal position, solvency parameters and fiscal sustainability, points out a recent report by the Reserve Bank of India (RBI).
Majority of states, do not report data on liabilities and guarantees in the prescribed format, the report says.
Only few states provide information on assets (three states), claims and commitments (11 states) and liabilities with respect to major works and contract, points out the report called, State Finances: Study of Budgets 2012-13, published by the RBI.
Some states do not publish the document called, “Budget at a Glance”. Also, most states are yet to comply with the requirements of a sensitivity analysis for fiscal forecast, the report said.
Information on extra-budgetary activities, quasi-fiscal activities and composition of debt and financial assets are only partially reflected in state budgets, the report states.
Also, state budgets do not provide information on the financial position of local bodies (except for compensation and assignment to local bodies) and do not publish reports on their long term public finances, the report said.
Moreover, the state governments are yet to establish to formal institutional mechanism to assess fiscal and macroeconomic forecast.
“Despite the above lacunae, fiscal transparency at the state government level has increased, particularly after the enactment of the FRBM Acts. There is, of course, scope for further improvement in terms of uniform accounting practices and data consistency across budget documents,” the report said.
Moreover, the report said, all states should publish quarterly/half yearly reviews of state government’s fiscal position, and also disclose information on GSDP, financing gross fiscal deficit and public capital outlays.
States should also publish economic and functional classification of expenditure, based on budgetary data.
The RBI has also prescribed states to publish data on outstanding liabilities in the prescribed format, and asked for dissemination of information relating to interest rates and maturity profile in respect to various components of outstanding liabilities.
