ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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The Sixteenth Finance Commission

Correcting the state fiscal imbalances should be the top priority.

The recent report on state finances by the Reserve Bank of India paints an optimistic scenario of the fiscal position of the states. It does this by highlighting the improvement in state finances following the curtailment of the higher outlays allocated for alleviating the all-round distress during the pandemic. The report was also confident of a favourable fiscal outlook in 2023–24 as it expected the budgeted increase in capital allocations to improve the overall prospects of the states.

The major worry highlighted in the report was the precarious fiscal scenario in some states where the budgeted fiscal deficit was above 4% of the gross state domestic product (GSDP) and whose debt levels exceeded 35% of the GSDP. Looking forward, the report called upon the Sixteenth Finance Commission, whose terms of references have been recently approved by the union cabinet, to recommend measures for scaling up the fiscal capacity of the states and for reviewing the parameters for devolution of grants.

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Updated On : 30th Dec, 2023
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