RBI calls for greater focus on state finances

The Reserve Bank of India has called for greater attention on structural issues confronting state finances in the country. Releasing a publication today which focuses on the study of budgets of state finances, the RBI said there is need for greater focus on structural issues confronting state finances, particularly for those states that could not undertake rule-based fiscal corrections prior to the crisis years of 2008-09 and 2009-10. 

It said the state governments need to ensure that their finances capture both explicit and implicit liabilities associated with certain off-budget activities, including project financing undertaken through special purpose vehicle or public-private partnership mode. 

The study also highlighted several issues of significance and concern for the state governments. RBI said the recommended restructuring of the public expenditure system would enable better management of outlays for effective outcomes.It also pointed out that successful restructuring of the public expenditure management system would, however, call for appropriate assimilation of the new system across the government machineries at all levels including the Planning Commission, the Central and the state governments. 

Concerned with financial losses of state power utilities, the Central Bank also emphasised on the issues on debt liabilities of distribution utilities and the revision of power tariffs of the states.