Budget to monitor the fiscal health of the states

NEW DELHI: when to finance Minister Nirmala Sitharaman he gets to prepare his second Budget , she will watch not only the Center fiscal situation but also the condition in state , some of whom have been borrowing heavily from the market and are also sitting on funds.

“The Centre needs to look at the combined figure and not just the 3.3% that it has budgeted for. Only then can we take a holistic approach,” said a source, adding that an attempt will also be made to clean up the off- Budget items. After all, global investors and rating agencies keep an eye on the consolidated fiscal deficit of a country and do not limit their decisions to the Centre’s financial Health alone.

Sources said that some of the state have been putting pressure on the RBI to let them tap the market to raise money even if they had sufficient resources at their disposal. In fact, several of them are sitting on funds that has been released by the Centre under various heads. In any case, economists have been complaining about the state being lazy in raising own tax revenue in recent years and, with the Centre offering to compensate them in case GST collections grow at under 14%, the state machinery is not sufficiently encouraged to raise resources and plug leakages.

But the problem of sitting on idle funds is not limited to the state — even central ministries follow a similar approach, often refusing to share data with the to finance ministry. North Block has now made it clear that it will only release funds if the earlier money was utilised.

During recent consultations, the to finance ministry has also asked the ministries and public sector companies linked to them to ensure that there is adequate capital expenditure.