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

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The Mandal System in Telangana and Andhra Pradesh

The mandal system came into existence as an administrative reform, as part of reducing the size of erstwhile taluks and making them more effective and manageable. The decentralisation of taluks into mandals was done with a two-pronged strategy of modernising the revenue administration, record-keeping as well as further decentralising the panchayati raj system. It was hoped that the division of erstwhile large taluks into mandals could make them more manageable, and also that the administration of the state government, especially the revenue administration, will become modernised.

Fiscal Restraint Trumps Fiscal Stimulus

The 2020 Union Budget has failed to provide any fiscal stimulus based upon the assumption that there is no fiscal space for providing growth stimulus. In doing so, it missed out on the opportunity of leveraging an additional fiscal space of around 10% of the gross domestic product that could have been tapped through revenue and expenditure rationalisation measures.

Sabka Vishwas Scheme

Sabka Vishwas Scheme is a dispute resolution-cum-amnesty scheme, with an objective of generating revenue in the short term, by inclusion into the tax net of delinquent taxpayers and those with pending disputes. Such measures renegotiate the contract between the state and its citizens, hurting equity in the tax system. Adherence to such measures reduces the taxable capacity of the state in the long run, by adversely affecting motivation towards compliance.

Inclusive Fiscal Adjustment for Reviving Growth

Unrealistic revenue projections leading to strong expenditure compression is primarily responsible for India’s growth deceleration. Growth will decelerate further without a programme of deep fiscal adjustment. How a fiscal space, amounting to over 6% of the gross domestic product, can be freed through such an adjustment programme is demonstrated. This space can be potentially used for an inclusive public expenditure-led strategy for reviving growth.

State Level Debt–Deficit Dynamics

An analysis of the debt and deficit of states based on the budget estimates of 2016–17 shows that almost half of them have a fiscal deficit target higher than the limit set in the Fiscal Responsibility and Budget Management Act. These states need to focus on the quality of expenditure and elimination of revenue deficit as per the framework proposed by the Fourteenth Finance Commission to enhance state-level capital spending.

Not for Growth

Sticking to the firm commitment to contain fiscal deficits, the reduced thrust on government spending does not seek to be countercyclical given that economic growth is falling. There is vast scope to step up collection of corporate taxes by widening the tax base through greater compliance.

An Examination of Revenue Generation

The revenue side of the budget is scrutinised to understand if the government is being realistic about revenue generation in 2017–18. Clearly, there is over-optimism, given that economic growth will be slow. Too much is expected from voluntary disclosure and penalties, while incentives are not in place. It would make sense to allow some slippage in the deficit targets in order to revive the economy. In addition, the increasing problem of cesses is discussed with reference to the Krishi Kalyan Cess to assess whether cesses serve the purpose for which they are introduced.

Beyond Fiscal Prudence and Consolidation

Since sustainable deficit could be different than the numeric fiscal rule, a review of the Fiscal Responsibility and Budget Management Act is timely and important. However, such a review should bear in mind that macro-stabilisation is a central function and the burden of fiscal adjustment should squarely fall on the union government keeping state debt and deficits withinFRBM limits. Maintaining the higher tax to gross domestic product ratio of last year will be key for fiscal prudence in 2016-17.

Managing Radio Frequency Spectrum

Radio spectrum is a limited resource and by tradition has come to be owned by the state. Its use has to be regulated in terms of purpose of use, place, transmitted power and coverage including directivity. In India the sharp demand for allotment of radio spectrum arose in the 1990s with the introduction of cellular mobile radio. The government and its agencies have not been particularly able or wise in coping with the diverse demands since then.

Horizontal Imbalances in India

Horizontal imbalances (measured by the coefficient of variation in own revenue as a percentage of total expenditure) persist in India even today mainly due to a host of economic and political factors. Variations in tax base, tax effort, infrastructural facilities - both physical and social - and political uncertainty are found to be the important determinants of horizontal imbalances. The dispersion in horizontal imbalance can only be reduced through all-round development of the poorer states. General-purpose transfers from the centre are essential for horizontal equity but they cannot ensure a permanent solution.

Plight of Power Sector in India-II

The unaccountability of state Electricity Boards (SEBs) in India has led to gross inefficiency at all levels. This article examines significant aspects of inefficiency costs involved in SEBs functioning. Part I of this article, published last week, dealt with physical performance focusing on such aspects as technical inefficiency, T and D losses, its possible underestimation, as well as some aspects of institutional and organisational inefficiency. Part II deals with the supply cost of electricity, tariff and revenue, as well as financial performance.
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