ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

Articles By Fiscal Discipline

Is Public Expenditure Management Sufficient for Sustainable Fiscal Discipline?

In Odisha, the government has made continuous efforts to achieve the objectives of public expenditure management in view of the inherent deficiency of tax capacity to meet the rising public expenditure. Given the necessity of such an expenditure for ensuring the provision of basic facilities for citizens, it needs to be managed well to ensure efficiency, stability and development. Analysing fiscal discipline and strategic prioritisation of public expenditure using secondary data from 1980–81 to 2018–19, and the operational efficiency of public expenditure using primary data about the construction of check dams, it is found that fiscal discipline in Odisha is unsustainable due to lack of strategic prioritisation and operational inefficiency.

Small Savings and Market Mythology

The report of the Reddy Committee advocates market-determined interest rates on small savings, which it says are "high cost borrowings" for the government. In recommending reduction of interest rates on such schemes, the committee has overlooked the nub of the problem, namely, the government's fiscal profligacy gobbling up huge resources. Besides, fluctuating yields cause uncertainty for the small investor and can adversely affect growth.

Withering Away of Canons of Financial Propriety

It is a matter for concern that in Maharashtra, a state which was once considered among the best governed in the country with sound financial management, serious questions are being raised whether a state of financial emergency needs to be declared under Article 360 of the Constitution which would be the first instance of its kind after independence. Why has the situation come to this pass and what needs to be done to set it right?

Finance Commissions in a Cul-de-sac

The reports of successive finance commissions make it clear that the institution of the finance commission is progressively getting trapped in a cul-de-sac. The reports have become a ritual and for the most part have hardly anything new to contribute though the fiscal position of the states and the centre has deteriorated sharply over time. The elaborate quinquennial exercise, lasting over three years on each occasion and involving intensive discussion with all the state governments and central ministries, academics, representatives of trade and industry and other knowledgeable persons, has hardly thrown up any new idea. The successive commissions have instead merely tinkered with the percentages of horizontal distribution among the states along with effecting marginal increases in central devolution.