The Hindu : National : Haryana, Delhi top in financial health: survey

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Haryana, Delhi top in financial health: survey

Special Correspondent

NEW DELHI: Haryana, Delhi, Orissa are the best performing States in terms of financial health, while Bihar, Jharkhand and Kerala need to cut both fiscal and revenue deficits, says an Assocham Eco Pulse study.

Haryana had the minimum fiscal deficit of 0.6 per cent in the financial year 2006-07, marginally up from 0.3 per cent the previous year. Delhi was at the second spot with 0.7 per cent fiscal deficit, while its revenue account showed a surplus of 3.57 per cent.

Though Orissa recorded a fiscal deficit of 1.1 per cent in 2006-27, higher than 0.4 per cent the previous year, it managed to remain well under the three per cent figure recommended by the 12th Finance Commission. Its revenue surplus increased from 0.76 to 0.9 per cent during the same period, says the study released on Tuesday.

Gujarat (2.5 per cent), Chhattisgarh (2.6), Tamil Nadu (2.7) and Karnataka (2.8) are the other States which kept their expenditures in line with the target of three per cent fiscal deficit.

But the financial stability of Bihar, Jharkhand and Kerala may become a matter of concern what with their continuously high fiscal and revenue deficits.

Widening gap

According to the study based on the data provided by the Reserve Bank of India, the Finance Ministry and the budget documents of the States, the gap between the total receipts and expenditure of the State governments, as measured by the ratio of gross fiscal deficit to gross state domestic product (GSDP), widened during the last two years.

Bihar, which tops the chart on this count, recorded a rise in the fiscal deficit from 6.1 per cent in 2005-06 to 10.4 per cent in 2006-07.

The revenue earnings also fell short of the revenue expenses by 1.14 per cent.

Jharkhand’s woe

Jharkhand also faced a huge fiscal deficit of 10.1 per cent in 2006-07, a marginal decline from 10.3 per cent the previous year.

Kerela is facing a huge budgetary imbalance with the fiscal deficit rising from 3.5 per cent in 2005-06 to 6.1 per cent in 2006-07, and the revenue deficit burgeoning from 2.6 to 4.36 per cent.

“There are many factors which can be attributed to the wide fiscal gap in some of the States, including growing interest payments, pension liabilities, unrestrained administrative expenditures, and low growth in tax collections,” says Assocham president Venugopal Dhoot.

But the collective figures of the States present a different picture.

The aggregate revenue deficit declined from 1.2 per cent in the financial year 2004-05 to 0.04 per cent in 2005-06. The financial year 2006-07 witnessed a revenue surplus of 0.01 per cent.

The overall gross fiscal deficit of the States, measured in proportion to GDP, saw a marginal increase from 2.4 per cent in 2005-06 to 2.6 per cent in 2006-07.

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