A Statutory Tale for Fiscal Intemperance

A Statutory Tale for Fiscal Intemperance

The Reserve Bank of India’s (RBI) study on the state budgets of 2017-18 and 2018-19 has rightly cautioned(आगाह/चेतावनी दी) states that their finances can get derailed(निकल गया/पटरी से उतार दिया) with sops(रियायतों) like loan waivers(छूट). States like Andhra Pradesh, Telangana, Maharashtra, Uttar Pradesh, Punjab, Rajasthan and Karnataka have already sanctioned(अधिकृत करना/स्वीकृत) farm loan waivers, and this ‘competitive(प्रतिस्पर्धा/प्रतियोगितात्मक) spirit(भावना/बढ़ावा देना)’ could spread(फैलाना/वृद्धि) to other poll-bound states. Such waivers not only hurt credit discipline(अनुशासन) but also add to the states’ fiscal(वित्तीय/राजकोषीय ) deficit(घाटा) and raise(उठाना/बढ़ाना) public sector borrowing(उधार लेना), setting off anxiety(चिंता/घबराहट) on the country’s fiscal discipline. The Centre has pushed back the goal of a 3% fiscal deficit for FY2019, and slippage(फिसलन) at the state level could push up the general government deficit in the medium term. An increase in government borrowings to fund loan waivers will crowd(भीड़) out private(निजी ) investment(निवेश ). And the consequences(परिणाम/महत्त्व) of fiscal imprudence(नासमझी/असावधानी) will be, without doubt, adverse for the country.

The gross fiscal deficit (GFD) of states rose to 3.1% of GDP in the revised(संशोधित/पुनरीक्षित) estimates(अनुमान/आकलन करना) for 2017-18 against the budgeted estimate of 2.7% of GDP. This is due to a shortfall in their own tax revenues(राजस्व/आय ) and higher revenue expenditure(व्यय/खर्च) . However, there are gaps in the data on the goods and services tax (GST). In 2018-19, states will make another attempt(प्रयास/आज़माना) at fiscal consolidation(समेकन/एकत्रीकरण). This calls for raising more revenues and desisting giveaways. States’ debt position is worrisome(चिंताजनक). The issuance(जारी करने, निर्गमन/प्रकाशन) of Ujwal Discom Assurance Yojana (UDAY) bonds in 2015-16 and 2016-17, farm loan waivers and the implementation(कार्यान्वयन/अमल) of pay commission awards led to higher debt-GDP ratio at 24% in 2017-18 (revised estimates), and that is expected(उम्मीद /अपेक्षित होना) to rise(वृद्धि/उन्नति) to 24.3% in 2018-19. GST will be a revenue spinner in the medium term.  States also need to improve(सुधारना)Realization(प्राप्ति /वसूली) from state power distribution(वितरण/विस्तार) utilities(लाभ/उपयोगिताओं) and levy reasonable(वाजिब/उचित) user charges to support fiscal consolidation and create the space to spend on health and education. RBI says that getting state bonds rated on the basis of prudent(समझदार /विवेकी) fiscal performance could provide incentives(प्रोत्साहन राशि) for such changes as better ratings will bring the deserving(लायक़/क़ाबिल) states the benefit of lower borrowing yields(पैदावार/मान लेना) . This makes sense. Sticking(चिपटनेवाला/लिपटना) to the path of fiscal rectitude(सुधार /न्याय) calls for political courage(साहस/पराक्रम).

 

 

Important Vocabulary

1.Sops(रियायतों)
Synonyms: absorb, bribe, dip, douse, dunk
Antonyms: dehydrate, dry

2.Derailed(निकल गया/पटरी से उतार दिया)
Synonyms: crash, hinder, thwart, wreck, deflect
Antonyms: aid, assist, encourage, forward, help

3.Spread(फैलाना/वृद्धि
Synonyms: advance, advancement, dissemination, escalation, increase
Antonyms: halt, stop, abridgment, compression, decrease

4.Anxiety(चिंता/घबराहट)
Synonyms: angst, apprehension, concern, disquiet, doubt
Antonyms: advantage, belief, blessing, calm, calmness

5.consequences(परिणाम/महत्त्व
Synonyms: corollary, emanation, importance, ramification, residual
Antonyms: causes

6.Imprudence(नासमझी/असावधानी)
Synonyms: carelessness, foolishness, neglect, recklessness
Antonyms: care, carefulness, caution

7.Expenditure(व्यय/खर्च)
Synonyms: amount, consumption, cost, disbursement, expense
Antonyms: savings

8.Realization(प्राप्ति /वसूली)
Synonyms: awareness, recognition, understanding, cognizance, consciousness, grasp
Antonyms: ignorance

9.Reasonable(वाजिब/उचित
Synonyms: acceptable, cheap, equitable, fair, feasible
Antonyms: assured, biased, bold, invalid, irrational

10.Sticking(चिपटनेवाला/लिपटना)
Synonyms: attach, catch, fix, glue, hold
Antonyms: go, halt, leave, let go, release

11.Rectitude(सुधार /न्याय)
Synonyms: decency, honesty, integrity, morality, probity
Antonyms: corruption, deceit, dishonesty, immorality, evil

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