Context: While the Union Budget 2021-22 acknowledged India’s need to diverge from its fiscal consolidation path, yet ensuring the efficient use of that resources is as important.
Trends of Public Expenditure and Borrowing in India
Rising interest burden on debt: estimated to increase by Rs 78,000 crore in the current fiscal and Rs 1.14 trillion in the next.
Reduced productive expenditures: due to the high-interest on debt bill.
Revenue expenditure for agriculture and allied services (by Rs 2.01 trillion) and rural employment (by Rs 39,000 crore) has been reduced.
Capital expenditure on railways, police reforms and urban development has been reduced (Rs 29,000, Rs 4,926 and Rs 1,721 crore).
Sources of receipts: Capital account, market loans and 14-day treasury bills are key sources of receipts has been consistently higher than the revenue receipts.
Way Forward:
Additional grants for strengthening economy: to specific states for the key sectors of health, education, agriculture, roads, districts and blocks, the judiciary, and statistics. (as recommended by the 15th Finance Commission)
Constitution of an independent fiscal council: to provide fiscal forecasts, evaluate fiscal performance, and set and monitor compliance with fiscal targets.
Improve tax-GDP ratio: by raising finances from several sources.
Debt management:
Create Independent public debt management cells: under States, for them to borrow efficiently.
Debt management at the central level should similarly be dispassionately reviewed.