Arvind Subramanian asks states not to overspend
As per the Fiscal Responsibility and Budget Management Act, states are required to contain their fiscal deficit at three per cent of GSDP.
New Delhi: Chief Economic Adviser Arvind Subramanian said on Friday that the states are expected to show “prudence” and contain their fiscal deficit at three per cent of the Gross State Domestic Product (GSDP).
“Until recently, the Centre was much more profligate than the states. Average fiscal deficit of states was half of that of the Centre. All of them (states) had implemented their own fiscal responsibility legislation... The Centre was playing more fast and loose with its FRBM,” he said. As per the Fiscal Responsibility and Budget Management Act, states are required to contain their fiscal deficit at three per cent of GSDP.
However, 5 out of 16 states — Rajasthan, Telangana, Bihar, MP, UP — have brea-ched this limit, even after discounting for Uday loans.