Trends and Sustainability in State Finances of Himachal Pradesh
DOI:
https://doi.org/10.53983/ijmds.v15n06.022Keywords:
Fiscal Health, Financial Sustainability, Fiscal Responsibility, Public DebtAbstract
Fiscal Health of states in India reflected through NITI Aayog’s Fiscal Health Index shows significant inter-state disparities. Guided by strong revenue mobilisation, fiscal prudence and effective debt management Odisha has been ranked top-performing state in India. Using the data from the CAG of India’s Audit reports, the present paper studied the trends in the fiscal health of Himachal Pradesh. Data on state finances reflect mounting fiscal pressures and increased dependence of the state on central transfers to fund its developmental needs. Since 2000-01, despite more than tenfold increase in Gross State Domestic Product (GSDP), the fiscal challenges of the state still persist due to almost stagnant revenue receipts, expenditure patterns in the form of high revenue expenditure and low capital expenditure. The deficits trends of the state also show breaching of targets set up by the Finance Commission and the HP-FRBM Act. Apart from these increasing liabilities, and central-state financial dynamics have also impacted the fiscal health of Himachal Pradesh. For fiscal sustainability there is a need to adopt comprehensive reforms and disciplined fiscal management by the state.
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