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July 12, 2001
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Money > Business Headlines > Report July 12, 2001 |
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Three areas of concern in Central finances: RBIBS Banking Bureau The Reserve Bank of India, in its monthly bulletin for July 2001, has pointed out three areas of concern regarding the stability and sustainability of the Central government finance -- weak revenue base, shortfall in the realisation of divestment receipts and the increasing government borrowing programme. However, the central bank praised the Budget for 2001-02 saying that it has envisaged fresh impetus to fiscal consolidation. The RBI mentioned that the estimated revenue-GDP (gross domestic product) ratio for the current fiscal dipped to 9.4 per cent compared with 9.8 per cent in the eighties, while the tax-GDP ratio continued to hover around 9 per cent indicating no improvement in revenue base of the economy. The apex bank also fears that the slippage in the realisation of the divestment receipts may be a hindrance for achieving the deficit targets. The Central government had set a divestment target of Rs 120 billion for the current fiscal compared with Rs 25 billion in the revised estimates of the last fiscal. The RBI has also expressed concerns over the rising government borrowing programme. It said, "The rising debt, besides causing debt rollovers of large magnitude, will increase the debt-servicing burden." It added that the rising burden of interest rate is reflected in the increasing interest rate payments-revenue receipts ratio, which went up from 39.1 per cent in 1990-91 to 48.8 per cent in 2001-02. "The long-term sustainability of the fiscal policy rests upon the complete elimination of revenue deficit and containment of fiscal deficit within a manageable level. Once made an Act, the Fiscal Responsibility and Management Bill, 2000, would provide the necessary legal and institutional environment towards fiscal stability and sustainability." the central bank feels. Powered by YOU MAY ALSO WANT TO READ:
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