Several structural problems with state finances

The state governments,it said,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 SPV or public-private partnership PPP mode.

The study also highlighted several issues of significance and concern for the state governments.

Although all the states except Goa have amended their fiscal responsibility and budget management FRBM Acts or Rules,most of them do not include provisions for additional disclosures for enabling transparent assessment of stae finances.

According to the RBI,the recommended restructuring of the public expenditure system would enable better management of outlays for effective outcomes.

The report also emphasised on the issues on debt liabilities of distribution utilities and the revision of power tariffs. Besides state finances,the study also referred to issues regarding fiscal consolidation,decline in key expenditure ratios that raises concern on the quality of fiscal adjustment and statesoverall debt-GDP ratio.