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TRANSCRIPT
A Comparative Study of Northern States
State Finances
Key Highlights 3
I. Overview 4
II. State Revenues 5
III. State Expenditures 8
IV. Deficit Indicators 10
Revenue Deficit 10
Gross Fiscal Deficit 11
Primary Deficit 11
V. Debt Position 12
VI. Fiscal Responsibility Legislation Framework 15
Table of Contents
Notes
Ÿ GDP stands for Gross Domestic Product
Ÿ GSDP stands for Gross State Domestic Product
Ÿ TwFC stands for 12th Finance Commission
Ÿ Figures are a percentage of GDP for all State average and for States percentage of GSDP, unless
otherwise stated
Ÿ Deficit means expenditure greater than revenue and is indicated with a + sign; surplus means
revenue greater than the expenditure and is indicated with - sign.
Ÿ The data for the report has been sourced from State Finances: A Study of Budgets of 2010-11,
RBI, except stated otherwise
Ÿ Figures pertaining to 2009-10 are Revised Estimates (RE). These have been compared with the
average of 2005-08.
Economic Research & Policy Division -CII (NR)02 Economic Research & Policy Division -CII (NR) 03
l During 2009-10 Uttar Pradesh, Jammu & Kashmir and NCT of Delhi were revenue surplus States in Northern
Region.
l Punjab, Rajasthan and Uttarakhand recorded Revenue Deficits higher than the all States average.
l Jammu & Kashmir registered the highest Own Tax Revenue - GSDP ratio followed by Rajasthan and
Uttarakhand.
l Except Himachal Pradesh and Haryana, all Northern States met the TwFC target for Own Tax Revenue as
percentage of GSDP.
l Himachal Pradesh achieved the highest Own Non-Tax Revenue -GSDP ratio.
l VAT contributed more than one-half of State's Own Tax Receipts in case of all Northern States, except
Uttarakhand.
l Revenue Expenditure as percentage of GDP increased during in 2009-10 over the 2005-08 (average) in
Northern States, except Punjab and Himachal Pradesh.
l Development Revenue Expenditure as percentage of GSDP was higher for Uttarakhand, Rajasthan, NCT of
Delhi, and Jammu & Kashmir as compared to all State average.
l Gross Fiscal Deficit for all Northern States, except NCT of Delhi ran higher than the all State average for the
year 2009-10.
l All States in the region witnessed Primary Deficits in 2009-10. Uttarakhand registered the highest Primary
Deficit.
l All Northern States except Jammu & Kashmir registered an improvement in the Debt-GSDP ratio in 2009-10.
l Punjab has the highest proportion of National Small Savings Fund (NSSF) followed by Uttarakhand and
Haryana, which typically bear higher interest burden.
l Interest Payments-Revenue Receipts ratio is highest for Punjab in the Northern region, followed by
Himachal Pradesh and Rajasthan.
Key Highlights
Key Highlights 3
I. Overview 4
II. State Revenues 5
III. State Expenditures 8
IV. Deficit Indicators 10
Revenue Deficit 10
Gross Fiscal Deficit 11
Primary Deficit 11
V. Debt Position 12
VI. Fiscal Responsibility Legislation Framework 15
Table of Contents
Notes
Ÿ GDP stands for Gross Domestic Product
Ÿ GSDP stands for Gross State Domestic Product
Ÿ TwFC stands for 12th Finance Commission
Ÿ Figures are a percentage of GDP for all State average and for States percentage of GSDP, unless
otherwise stated
Ÿ Deficit means expenditure greater than revenue and is indicated with a + sign; surplus means
revenue greater than the expenditure and is indicated with - sign.
Ÿ The data for the report has been sourced from State Finances: A Study of Budgets of 2010-11,
RBI, except stated otherwise
Ÿ Figures pertaining to 2009-10 are Revised Estimates (RE). These have been compared with the
average of 2005-08.
Economic Research & Policy Division -CII (NR)02 Economic Research & Policy Division -CII (NR) 03
l During 2009-10 Uttar Pradesh, Jammu & Kashmir and NCT of Delhi were revenue surplus States in Northern
Region.
l Punjab, Rajasthan and Uttarakhand recorded Revenue Deficits higher than the all States average.
l Jammu & Kashmir registered the highest Own Tax Revenue - GSDP ratio followed by Rajasthan and
Uttarakhand.
l Except Himachal Pradesh and Haryana, all Northern States met the TwFC target for Own Tax Revenue as
percentage of GSDP.
l Himachal Pradesh achieved the highest Own Non-Tax Revenue -GSDP ratio.
l VAT contributed more than one-half of State's Own Tax Receipts in case of all Northern States, except
Uttarakhand.
l Revenue Expenditure as percentage of GDP increased during in 2009-10 over the 2005-08 (average) in
Northern States, except Punjab and Himachal Pradesh.
l Development Revenue Expenditure as percentage of GSDP was higher for Uttarakhand, Rajasthan, NCT of
Delhi, and Jammu & Kashmir as compared to all State average.
l Gross Fiscal Deficit for all Northern States, except NCT of Delhi ran higher than the all State average for the
year 2009-10.
l All States in the region witnessed Primary Deficits in 2009-10. Uttarakhand registered the highest Primary
Deficit.
l All Northern States except Jammu & Kashmir registered an improvement in the Debt-GSDP ratio in 2009-10.
l Punjab has the highest proportion of National Small Savings Fund (NSSF) followed by Uttarakhand and
Haryana, which typically bear higher interest burden.
l Interest Payments-Revenue Receipts ratio is highest for Punjab in the Northern region, followed by
Himachal Pradesh and Rajasthan.
Key Highlights
The status of state finances has a direct impact on the economy of a particular State. Well managed public
finances and healthy surpluses provide the State Government with funds to focus on developmental activities and
building physical infrastructure. This in turn has a direct bearing on the investment attractiveness and growth
potential of the State.
1This report seeks to examine the fiscal position for States in the Northern Region . Northern Region includes five
non-special category States - NCT of Delhi, Haryana, Punjab, Rajasthan, and Uttar Pradesh & three special 2
category States -Jammu & Kashmir, Himachal Pradesh, and Uttarakhand.
The fiscal health of Northern States, as measured by the Deficit Indicators is a mixed performance.
Uttar Pradesh, Jammu & Kashmir and NCT of Delhi were revenue surplus States. Jammu & Kashmir was revenue
surplus on account of high Central Transfers - amounting to 39.6 percent of GSDP in 2009-10. Haryana, Punjab,
Rajasthan and Uttarakhand recorded Revenue Deficits higher than the all State average.
I. Overview
1 Chandigarh, although part of Northern Region, has not been included in this study as it is a UT and its finances are determined by the Center.
2 Special Category States are those states which have typical features like geographical isolation, inaccessible terrains, poor resource base, remoteness to larger markets and poor infrastructure.
Note: Development Expenditure includes Social & Community Services, General Economic Services, Agriculture, Irrigation, Industry, Power, Infrastructure, Public Works, and Rural Development etc;
RE - Revised Estimates
Figure in brackets pertain to 2005-08 (Avg.)
Table 1: Northern States: Fiscal Position at a Glance
Indicators Haryana Punjab Rajasthan UttarPradesh
HimachalPradesh
Jammu & Kashmir
Uttarakhand NCTDelhi
All States
Revenue Deficit
Gross Fiscal Deficit
Primary Deficit
Total Debt
Development Expenditure
Own Tax Reciepts
1.7(-1.3)
2.2 (1.7)
1.8(-0.3)
-0.4(-0.7)
0.4(-1.2)
-11.6(-6.8)
2.4(-1.4)
-3.5 (-3.7)
0.7(-0.4)
4.0(0.1)
3.4 (3.1)
4.5(2.8)
4.9(3.5)
5.4(2.6)
5.8(6.4)
8.3 (4.9)
1.8 (0.5)
3.3 (1.9)
2.6(-1.7)
0.6(-0.2)
1.4(-0.9)
2.3(0.3)
0.7(-3.2)
0.5(1.3)
5.1 (1.9)
0.5(-1.2)
1.5(-0.2)
19.0(22.4)
35.2 (42.6)
41.1 (47.2)
43.5 (53.2)
55.7 (63.9)
70.1 (68.9)
41.1 (43.0)
13.8 (19.4)
25.0(28.90)
11.2(9.8)
8.6 (8.4)
14.5 (13.3)
15.4 (13.3)
20.0 (18.5)
36.9 (32.5)
22.1 (18.4)
9.4 (7.4)
11.0 (9.1)
6.7(8.2)
7.2 (7.5)
7.6(7.6)
7.2(7.0)
6.2(5.9)
8.0(6.7)
7.5 (7.5)
6.8 (8.2)
5.6 (5.8)
Deficit Indicators (as % of GSDP/GDP - 2009 -10 RE)
Liabilities (as % of GSDP/GDP - 2009-10 RE)
Expenditure (as % of GSDP/GDP - 2009 -10 RE)
Revenue (as GSDP/GDP - 2009 - 10 RE)
Economic Research & Policy Division -CII (NR)04 Economic Research & Policy Division -CII (NR) 05
On an average basis, all Northern States, except Punjab and Rajasthan, recorded revenue surpluses higher than
the all State average.
Except NCT of Delhi, all the Northern States had greater Gross Fiscal Deficit compared to all State average,
indicating higher borrowing requirements. Correspondingly, all Northern States other than Haryana and NCT of
Delhi have high debt liabilities as a percentage of their respective GSDPs.
Own Tax Receipts for Northern States have been buoyant. The ratio of Own Tax Receipts to GSDP exceeded the
all States average for all Northern States, except in Punjab. The Development Expenditure (as a proportion of
respective State GSDP) is higher in all Northern States, except in Punjab & NCT of Delhi.
3 Central Transfers constitute both- Grant in aids and share of state in divisible tax pool of the Central Government.
The total Revenue Receipts as percent to GSDP has increased for five Northern States in 2009-10 over 2005-08
(Avg.) The increase is highest in Jammu & Kashmir, followed by Uttar Pradesh, Uttarakhand, NCT of Delhi and
Rajasthan. The increase for NCT of Delhi and Jammu & Kashmir is accounted for mainly by increase in Central 3Transfers , while the increase for the other three States is accounted for by Own Revenues.
II. State Revenues
Chart 1: Revenue Receipts
0 10 20 30 40 50 60
Haryana
Punjab
Rajasthan
Uttar Pardesh
Himachal Pradesh
Jammu & Kashmir
Uttarakhand
NCT - Delhi
11.013.2
13.214.3
16.916.8
20.018.3
24.927.1
51.142.8
23.422.2
11.010.1
12.312.2All States
(in per cent)
2009-10(RE) 2005-08 (Avg.)
The status of state finances has a direct impact on the economy of a particular State. Well managed public
finances and healthy surpluses provide the State Government with funds to focus on developmental activities and
building physical infrastructure. This in turn has a direct bearing on the investment attractiveness and growth
potential of the State.
1This report seeks to examine the fiscal position for States in the Northern Region . Northern Region includes five
non-special category States - NCT of Delhi, Haryana, Punjab, Rajasthan, and Uttar Pradesh & three special 2
category States -Jammu & Kashmir, Himachal Pradesh, and Uttarakhand.
The fiscal health of Northern States, as measured by the Deficit Indicators is a mixed performance.
Uttar Pradesh, Jammu & Kashmir and NCT of Delhi were revenue surplus States. Jammu & Kashmir was revenue
surplus on account of high Central Transfers - amounting to 39.6 percent of GSDP in 2009-10. Haryana, Punjab,
Rajasthan and Uttarakhand recorded Revenue Deficits higher than the all State average.
I. Overview
1 Chandigarh, although part of Northern Region, has not been included in this study as it is a UT and its finances are determined by the Center.
2 Special Category States are those states which have typical features like geographical isolation, inaccessible terrains, poor resource base, remoteness to larger markets and poor infrastructure.
Note: Development Expenditure includes Social & Community Services, General Economic Services, Agriculture, Irrigation, Industry, Power, Infrastructure, Public Works, and Rural Development etc;
RE - Revised Estimates
Figure in brackets pertain to 2005-08 (Avg.)
Table 1: Northern States: Fiscal Position at a Glance
Indicators Haryana Punjab Rajasthan UttarPradesh
HimachalPradesh
Jammu & Kashmir
Uttarakhand NCTDelhi
All States
Revenue Deficit
Gross Fiscal Deficit
Primary Deficit
Total Debt
Development Expenditure
Own Tax Reciepts
1.7(-1.3)
2.2 (1.7)
1.8(-0.3)
-0.4(-0.7)
0.4(-1.2)
-11.6(-6.8)
2.4(-1.4)
-3.5 (-3.7)
0.7(-0.4)
4.0(0.1)
3.4 (3.1)
4.5(2.8)
4.9(3.5)
5.4(2.6)
5.8(6.4)
8.3 (4.9)
1.8 (0.5)
3.3 (1.9)
2.6(-1.7)
0.6(-0.2)
1.4(-0.9)
2.3(0.3)
0.7(-3.2)
0.5(1.3)
5.1 (1.9)
0.5(-1.2)
1.5(-0.2)
19.0(22.4)
35.2 (42.6)
41.1 (47.2)
43.5 (53.2)
55.7 (63.9)
70.1 (68.9)
41.1 (43.0)
13.8 (19.4)
25.0(28.90)
11.2(9.8)
8.6 (8.4)
14.5 (13.3)
15.4 (13.3)
20.0 (18.5)
36.9 (32.5)
22.1 (18.4)
9.4 (7.4)
11.0 (9.1)
6.7(8.2)
7.2 (7.5)
7.6(7.6)
7.2(7.0)
6.2(5.9)
8.0(6.7)
7.5 (7.5)
6.8 (8.2)
5.6 (5.8)
Deficit Indicators (as % of GSDP/GDP - 2009 -10 RE)
Liabilities (as % of GSDP/GDP - 2009-10 RE)
Expenditure (as % of GSDP/GDP - 2009 -10 RE)
Revenue (as GSDP/GDP - 2009 - 10 RE)
Economic Research & Policy Division -CII (NR)04 Economic Research & Policy Division -CII (NR) 05
On an average basis, all Northern States, except Punjab and Rajasthan, recorded revenue surpluses higher than
the all State average.
Except NCT of Delhi, all the Northern States had greater Gross Fiscal Deficit compared to all State average,
indicating higher borrowing requirements. Correspondingly, all Northern States other than Haryana and NCT of
Delhi have high debt liabilities as a percentage of their respective GSDPs.
Own Tax Receipts for Northern States have been buoyant. The ratio of Own Tax Receipts to GSDP exceeded the
all States average for all Northern States, except in Punjab. The Development Expenditure (as a proportion of
respective State GSDP) is higher in all Northern States, except in Punjab & NCT of Delhi.
3 Central Transfers constitute both- Grant in aids and share of state in divisible tax pool of the Central Government.
The total Revenue Receipts as percent to GSDP has increased for five Northern States in 2009-10 over 2005-08
(Avg.) The increase is highest in Jammu & Kashmir, followed by Uttar Pradesh, Uttarakhand, NCT of Delhi and
Rajasthan. The increase for NCT of Delhi and Jammu & Kashmir is accounted for mainly by increase in Central 3Transfers , while the increase for the other three States is accounted for by Own Revenues.
II. State Revenues
Chart 1: Revenue Receipts
0 10 20 30 40 50 60
Haryana
Punjab
Rajasthan
Uttar Pardesh
Himachal Pradesh
Jammu & Kashmir
Uttarakhand
NCT - Delhi
11.013.2
13.214.3
16.916.8
20.018.3
24.927.1
51.142.8
23.422.2
11.010.1
12.312.2All States
(in per cent)
2009-10(RE) 2005-08 (Avg.)
4
determined by the respective Finance Commissions. Criterion used by 13th Finance Commission to calculate the share of states include- Population 1971 (25%), Area (10%), Fiscal Capacity Distance (47.5%), and Fiscal Discipline (17.5%). Fiscal capacity distance measures the distance of the estimated potential per capita tax revenue of each state using different weighted average tax ratios for General and Special Category states from that of Haryana, which ranks second under this criterion.
Central Transfers constitute both- Grant in aids and share of state in divisible tax pool of the Central Government. The divisible pool of central taxes is
4The decline in Revenue Receipts for Himachal Pradesh is primarily on account of decline in Central Transfers ,
whereas the decline for Punjab & Haryana is largely on account of reduced Own Revenue.
Chart 2: Variation in Own Revenue and Central Transfers
Haryana
Punjab
Rajasthan
Uttar Pardesh
Himachal Pradesh
Jammu & Kashmir
Uttarakhand
NCT - Delhi
All States
-4.0 -2.0 0.0 2.0 4.0 6.0 8.0 10.0
CTOR
(in per cent)
0.4-0.1
-0.8 1.8
0.20.9
6.12.1
-2.4 0.2
1.7
0.1
-0.2 -0.7
0.8-3.0
Economic Research & Policy Division -CII (NR)06 Economic Research & Policy Division -CII (NR) 07
VAT is the most important tax revenue for the States, contributing more than one-half of their Own Tax Receipts in
case of all Northern States, except Uttarakhand. VAT collections remained buoyant inspite of the overall
economic slowdown and the share in Own Tax Revenue increased across all Northern States, except in Jammu &
Kashmir and Uttarakhand.
à For all States, the Own Tax Revenue was estimated to be 5.6 percent of GDP in the year 2009-10 (RE).
In the period 2005-08 it was 5.8 percent of GDP.
à Jammu & Kashmir registered the highest Own Tax Revenue - GSDP ratio of 8.0 percent in 2009-10
(RE), followed by Rajasthan- 7.6 percent and Uttarakhand- 7.5 percent. The ratio was lowest in the
region for Himachal Pradesh, 6.2 percent.
à Except Himachal Pradesh and Haryana, all Northern States met the TwFC target for Own Tax Revenue
as percentage of GSDP.
à Each of the Northern States was able to meet the TwFC target of the Own Non-Tax Revenue -GSDP
ratio of 1.4 percent. Himachal Pradesh achieved the highest (4.2 percent) in 2009-10 (RE), followed
by Jammu & Kashmir- 3.4 percent and Punjab- 3.3 percent.
Chart 3: Own Tax Revenue
Haryana
Punjab
Rajasthan
Uttar Pardesh
Himachal Pradesh
Jammu & Kashmir
Uttarakhand
NCT - Delhi
All States
0 2 4 6 8 10
6.78.2
7.57.2
7.67.6
7.27.0
6.25.9
8.06.7
7.57.5
6.88.2
5.85.6
(in per cent)
2009-10(RE) 2005-08 (Avg.)TwFC Target (6.8)
Chart 4: Own Non-Tax Revenue
Haryana
Punjab
Rajasthan
Uttar Pardesh
Himachal Pradesh
Jammu & Kashmir
Uttarakhand
NCT - Delhi
All States
0 1 2 3 4 5
1.53.0
3.73.3
2.32.2
3.11.6
4.24.3
3.42.6
3.02.1
1.81.2
1.51.4
(in per cent)
2009-10(RE) 2005-08 (Avg.)TwFC Target (1.4)
4
determined by the respective Finance Commissions. Criterion used by 13th Finance Commission to calculate the share of states include- Population 1971 (25%), Area (10%), Fiscal Capacity Distance (47.5%), and Fiscal Discipline (17.5%). Fiscal capacity distance measures the distance of the estimated potential per capita tax revenue of each state using different weighted average tax ratios for General and Special Category states from that of Haryana, which ranks second under this criterion.
Central Transfers constitute both- Grant in aids and share of state in divisible tax pool of the Central Government. The divisible pool of central taxes is
4The decline in Revenue Receipts for Himachal Pradesh is primarily on account of decline in Central Transfers ,
whereas the decline for Punjab & Haryana is largely on account of reduced Own Revenue.
Chart 2: Variation in Own Revenue and Central Transfers
Haryana
Punjab
Rajasthan
Uttar Pardesh
Himachal Pradesh
Jammu & Kashmir
Uttarakhand
NCT - Delhi
All States
-4.0 -2.0 0.0 2.0 4.0 6.0 8.0 10.0
CTOR
(in per cent)
0.4-0.1
-0.8 1.8
0.20.9
6.12.1
-2.4 0.2
1.7
0.1
-0.2 -0.7
0.8-3.0
Economic Research & Policy Division -CII (NR)06 Economic Research & Policy Division -CII (NR) 07
VAT is the most important tax revenue for the States, contributing more than one-half of their Own Tax Receipts in
case of all Northern States, except Uttarakhand. VAT collections remained buoyant inspite of the overall
economic slowdown and the share in Own Tax Revenue increased across all Northern States, except in Jammu &
Kashmir and Uttarakhand.
à For all States, the Own Tax Revenue was estimated to be 5.6 percent of GDP in the year 2009-10 (RE).
In the period 2005-08 it was 5.8 percent of GDP.
à Jammu & Kashmir registered the highest Own Tax Revenue - GSDP ratio of 8.0 percent in 2009-10
(RE), followed by Rajasthan- 7.6 percent and Uttarakhand- 7.5 percent. The ratio was lowest in the
region for Himachal Pradesh, 6.2 percent.
à Except Himachal Pradesh and Haryana, all Northern States met the TwFC target for Own Tax Revenue
as percentage of GSDP.
à Each of the Northern States was able to meet the TwFC target of the Own Non-Tax Revenue -GSDP
ratio of 1.4 percent. Himachal Pradesh achieved the highest (4.2 percent) in 2009-10 (RE), followed
by Jammu & Kashmir- 3.4 percent and Punjab- 3.3 percent.
Chart 3: Own Tax Revenue
Haryana
Punjab
Rajasthan
Uttar Pardesh
Himachal Pradesh
Jammu & Kashmir
Uttarakhand
NCT - Delhi
All States
0 2 4 6 8 10
6.78.2
7.57.2
7.67.6
7.27.0
6.25.9
8.06.7
7.57.5
6.88.2
5.85.6
(in per cent)
2009-10(RE) 2005-08 (Avg.)TwFC Target (6.8)
Chart 4: Own Non-Tax Revenue
Haryana
Punjab
Rajasthan
Uttar Pardesh
Himachal Pradesh
Jammu & Kashmir
Uttarakhand
NCT - Delhi
All States
0 1 2 3 4 5
1.53.0
3.73.3
2.32.2
3.11.6
4.24.3
3.42.6
3.02.1
1.81.2
1.51.4
(in per cent)
2009-10(RE) 2005-08 (Avg.)TwFC Target (1.4)
The State Governments account for around 60 percent of the combined expenditure of the Centre and States 5reflecting the vital role that the States play in the growth and development of the economy .
The all State average Revenue Expenditure as percentage of GDP increased during in 2009-10 over the 2005-08
(average). Northern States, except Punjab and Himachal Pradesh, followed the same pattern. The decline in
expenditure in these States was due to decline in proportion of the Non Developmental Revenue Expenditure.
Overall quality of Revenue Expenditure improved with greater increase in Developmental Revenue Expenditure
except for Jammu & Kashmir.
III. State Expenditures
5 State Finances: A study of Budgets of 2010-11, RBI
Chart 5: Revenue Expenditure
11.9
16.0 16.517.6
25.9
36.0
20.7
6.4
11.8
12.715.4
18.7 19.6
25.3
39.4
25.7
7.5
13.0
(in per cent)2005-08 (Avg.)
2009-10 (RE)
Hary
an
a
Pu
nja
b
Raja
sthan
Utta
r P
ard
esh
Him
ach
al
Pra
desh
Jam
mu
&
Kash
mir
Utta
rakh
an
d
NC
T -
Delh
i
All S
tate
s
Economic Research & Policy Division -CII (NR)08
Note: VAT is part of Taxes on Commodities and Services
Haryana
Punjab
Rajasthan
Uttar Pradesh
Himachal Pradesh
Jammu & Kashmir
Uttarakhand
NCT - Delhi
Taxes on Property
and Capital
Taxes on Commodities
and Services
VAT as Percentage of
Own Tax Revenue
2008-092009-10
(RE)2008-09
2009-10
(RE)2008-09
2009-10
(RE)
States
11.5
15.7
11.7
16.4
5.3
2.4
12.3
6.5
10.9
14.7
11.8
15.2
4.2
2.3
12.2
7.8
88.5
84.3
88.3
83.6
94.7
97.6
87.5
93.5
89.1
85.3
88.2
84.7
95.8
97.7
87.6
92.2
60.4
55.3
54.9
49.3
48.5
57.1
57.0
67.2
65.8
59.0
57.0
57.5
52.4
56.9
43.9
67.9
Table 2: Components of Own Tax Revenue
Economic Research & Policy Division -CII (NR) 09
Haryana, Punjab and NCT of Delhi trailed the all State average in terms of Social Sector Expenditure as a
proportion of GSDP. Haryana, Punjab, Rajasthan and NCT of Delhi trailed the all State average in terms Capital
Outlay as a proportion of GSDP. Capital Outlay assumes importance as it has a lasting impact on growth. If spent
efficiently, it ensures a more productive economy and enhances the Government’s revenue raising potential due
to higher expected GDP in the future.
6The increase in Development Revenue Expenditure as percentage of GSDP was higher for Uttarakhand,
Rajasthan, NCT of Delhi, and Jammu & Kashmir as compared to all State average. The Non Developmental
Revenue Expenditure declined for Himachal Pradesh, Punjab and NCT of Delhi.
6 Development Expenditure includes Social & Community Services, General Economic Services, Agriculture, Irrigation, Industry, Power, Infrastructure, Public Works, and Rural Development etc
Chart 6: Variation in Development Revenue Expenditure and Non Development Revenue Expenditure (2009-10 RE over 2005-08)
(in per cent)
Haryana
Punjab
Rajasthan
Uttar Pardesh
Himachal Pradesh
Jammu & Kashmir
Uttarakhand
NCT - Delhi
All States
6
DRE/GSDP NDRE/GSDP
-2 0 2 4
-0.1 1.1
-0.8 0.2
0.7
1.01.1
0.2-0.8
2.11.4
1.63.3
1.5-0.2
1.3
1.6
The State Governments account for around 60 percent of the combined expenditure of the Centre and States 5reflecting the vital role that the States play in the growth and development of the economy .
The all State average Revenue Expenditure as percentage of GDP increased during in 2009-10 over the 2005-08
(average). Northern States, except Punjab and Himachal Pradesh, followed the same pattern. The decline in
expenditure in these States was due to decline in proportion of the Non Developmental Revenue Expenditure.
Overall quality of Revenue Expenditure improved with greater increase in Developmental Revenue Expenditure
except for Jammu & Kashmir.
III. State Expenditures
5 State Finances: A study of Budgets of 2010-11, RBI
Chart 5: Revenue Expenditure
11.9
16.0 16.517.6
25.9
36.0
20.7
6.4
11.8
12.715.4
18.7 19.6
25.3
39.4
25.7
7.5
13.0
(in per cent)2005-08 (Avg.)
2009-10 (RE)
Hary
an
a
Pu
nja
b
Raja
sthan
Utta
r P
ard
esh
Him
ach
al
Pra
desh
Jam
mu
&
Kash
mir
Utta
rakh
an
d
NC
T -
Delh
i
All S
tate
s
Economic Research & Policy Division -CII (NR)08
Note: VAT is part of Taxes on Commodities and Services
Haryana
Punjab
Rajasthan
Uttar Pradesh
Himachal Pradesh
Jammu & Kashmir
Uttarakhand
NCT - Delhi
Taxes on Property
and Capital
Taxes on Commodities
and Services
VAT as Percentage of
Own Tax Revenue
2008-092009-10
(RE)2008-09
2009-10
(RE)2008-09
2009-10
(RE)
States
11.5
15.7
11.7
16.4
5.3
2.4
12.3
6.5
10.9
14.7
11.8
15.2
4.2
2.3
12.2
7.8
88.5
84.3
88.3
83.6
94.7
97.6
87.5
93.5
89.1
85.3
88.2
84.7
95.8
97.7
87.6
92.2
60.4
55.3
54.9
49.3
48.5
57.1
57.0
67.2
65.8
59.0
57.0
57.5
52.4
56.9
43.9
67.9
Table 2: Components of Own Tax Revenue
Economic Research & Policy Division -CII (NR) 09
Haryana, Punjab and NCT of Delhi trailed the all State average in terms of Social Sector Expenditure as a
proportion of GSDP. Haryana, Punjab, Rajasthan and NCT of Delhi trailed the all State average in terms Capital
Outlay as a proportion of GSDP. Capital Outlay assumes importance as it has a lasting impact on growth. If spent
efficiently, it ensures a more productive economy and enhances the Government’s revenue raising potential due
to higher expected GDP in the future.
6The increase in Development Revenue Expenditure as percentage of GSDP was higher for Uttarakhand,
Rajasthan, NCT of Delhi, and Jammu & Kashmir as compared to all State average. The Non Developmental
Revenue Expenditure declined for Himachal Pradesh, Punjab and NCT of Delhi.
6 Development Expenditure includes Social & Community Services, General Economic Services, Agriculture, Irrigation, Industry, Power, Infrastructure, Public Works, and Rural Development etc
Chart 6: Variation in Development Revenue Expenditure and Non Development Revenue Expenditure (2009-10 RE over 2005-08)
(in per cent)
Haryana
Punjab
Rajasthan
Uttar Pardesh
Himachal Pradesh
Jammu & Kashmir
Uttarakhand
NCT - Delhi
All States
6
DRE/GSDP NDRE/GSDP
-2 0 2 4
-0.1 1.1
-0.8 0.2
0.7
1.01.1
0.2-0.8
2.11.4
1.63.3
1.5-0.2
1.3
1.6
(A) Revenue Deficit
Revenue Deficit arises when the Government’s Revenue Receipts are lower than the Revenue Expenditure. It is
generally met by capital account surplus or borrowings. Thus, the Revenue Deficit effectively acquires the
resources which should normally go into capital investment or for developmental expenditure. The rising
Revenue Deficit is a matter of worry as far as the fiscal health of the States is concerned.
IV. Deficit Indicators
Chart 7: Quality of Expenditure in 2009-10
11.2 8.614.5 15.4
20
36.9
22.1
9.4 11
6.24.8
10.2 9.8
11.6
18
13.3
5.6 6.51.9 1.9
2.5 5.1
5
17.3
6.1
2.52.8
(in per cent)
Hary
an
a
Pu
nja
b
Raja
sthan
Him
ach
al
Pra
desh
Jam
mu
&
Kash
mir
Utta
rakh
an
d
NC
T - D
elh
i
All S
tate
s
Utta
r Pard
esh
CO/GSDP SSE/GSDP DEV/GSDP
Economic Research & Policy Division -CII (NR)10
Chart 8: Revenue Deficit
- 1.3 1.7
1.72.2
-0.31.8
-0.7-0.4
-1.20.4
-1.42.4
-3.7-3.5
-0.40.7
-6.8-11.6
-8 -6 -4 -2 0 2 4-10-12-14
Haryana
Punjab
Rajasthan
Uttar Pardesh
Himachal Pradesh
Jammu & Kashmir
Uttarakhand
NCT - Delhi
All States
(in per cent)
2009-10(RE) 2005-08 (Avg.)
Economic Research & Policy Division -CII (NR) 11
Jammu & Kashmir, NCT of Delhi and Uttar Pradesh recorded a Revenue Surplus during 2009-10. Jammu &
Kashmir registered the highest Revenue Surplus of 11.6 percent of GSDP during 2009-10(RE), owing to
substantial increase of 8.2 percent in Revenue Receipts including 6.1 percent increase in Central Transfer.
Uttarakhand registered the highest Revenue Deficit of 2.4 percent of GSDP, due to the sharp increase in the
Revenue Expenditure, from 20.7 to 25.7 percent, whereas there was no substantial increase in the Revenue
Receipts of the State.
Three of the larger economies of the region – Rajasthan, Punjab and Haryana witnessed Revenue Deficits.
(B) Gross Fiscal Deficit
The difference between Total Revenue and Total Expenditure of the Government is termed as Gross Fiscal Deficit.
It is an indication of the total borrowings needed by the Government.
Gross Fiscal Deficit for all Northern States, except NCT of Delhi ran higher than the all State average for the year
2009-10. Even in terms of the average for 2005-08, only NCT of Delhi and Haryana had a deficit lower than the all
States average.
(C) Primary Deficit
Primary Deficit is the deficit which is derived after deducting the Interest Payments from the Gross Fiscal Deficit.
Chart 9: Gross Fiscal Deficit
Himachal Pradesh
Jammu & Kashmir
0.1
3.1
2.8
3.5
2.6
6.4
4.9
0.5
1.9
4.0
3.4
4.5
4.9
5.4
5.8
8.3
1.8
3.3
0 2 4 6 8 1 0
(in per cent)
2009-10 (RE) 2005-08 (Avg.)
Haryana
Punjab
Rajasthan
Uttar Pardesh
Uttarakhand
NCT - Delhi
All States
TwFC Target (3.0)
(A) Revenue Deficit
Revenue Deficit arises when the Government’s Revenue Receipts are lower than the Revenue Expenditure. It is
generally met by capital account surplus or borrowings. Thus, the Revenue Deficit effectively acquires the
resources which should normally go into capital investment or for developmental expenditure. The rising
Revenue Deficit is a matter of worry as far as the fiscal health of the States is concerned.
IV. Deficit Indicators
Chart 7: Quality of Expenditure in 2009-10
11.2 8.614.5 15.4
20
36.9
22.1
9.4 11
6.24.8
10.2 9.8
11.6
18
13.3
5.6 6.51.9 1.9
2.5 5.1
5
17.3
6.1
2.52.8
(in per cent)
Hary
an
a
Pu
nja
b
Raja
sthan
Him
ach
al
Pra
desh
Jam
mu
&
Kash
mir
Utta
rakh
an
d
NC
T - D
elh
i
All S
tate
s
Utta
r Pard
esh
CO/GSDP SSE/GSDP DEV/GSDP
Economic Research & Policy Division -CII (NR)10
Chart 8: Revenue Deficit
- 1.3 1.7
1.72.2
-0.31.8
-0.7-0.4
-1.20.4
-1.42.4
-3.7-3.5
-0.40.7
-6.8-11.6
-8 -6 -4 -2 0 2 4-10-12-14
Haryana
Punjab
Rajasthan
Uttar Pardesh
Himachal Pradesh
Jammu & Kashmir
Uttarakhand
NCT - Delhi
All States
(in per cent)
2009-10(RE) 2005-08 (Avg.)
Economic Research & Policy Division -CII (NR) 11
Jammu & Kashmir, NCT of Delhi and Uttar Pradesh recorded a Revenue Surplus during 2009-10. Jammu &
Kashmir registered the highest Revenue Surplus of 11.6 percent of GSDP during 2009-10(RE), owing to
substantial increase of 8.2 percent in Revenue Receipts including 6.1 percent increase in Central Transfer.
Uttarakhand registered the highest Revenue Deficit of 2.4 percent of GSDP, due to the sharp increase in the
Revenue Expenditure, from 20.7 to 25.7 percent, whereas there was no substantial increase in the Revenue
Receipts of the State.
Three of the larger economies of the region – Rajasthan, Punjab and Haryana witnessed Revenue Deficits.
(B) Gross Fiscal Deficit
The difference between Total Revenue and Total Expenditure of the Government is termed as Gross Fiscal Deficit.
It is an indication of the total borrowings needed by the Government.
Gross Fiscal Deficit for all Northern States, except NCT of Delhi ran higher than the all State average for the year
2009-10. Even in terms of the average for 2005-08, only NCT of Delhi and Haryana had a deficit lower than the all
States average.
(C) Primary Deficit
Primary Deficit is the deficit which is derived after deducting the Interest Payments from the Gross Fiscal Deficit.
Chart 9: Gross Fiscal Deficit
Himachal Pradesh
Jammu & Kashmir
0.1
3.1
2.8
3.5
2.6
6.4
4.9
0.5
1.9
4.0
3.4
4.5
4.9
5.4
5.8
8.3
1.8
3.3
0 2 4 6 8 1 0
(in per cent)
2009-10 (RE) 2005-08 (Avg.)
Haryana
Punjab
Rajasthan
Uttar Pardesh
Uttarakhand
NCT - Delhi
All States
TwFC Target (3.0)
In recent years, the debt problem of the States has taken centre stage as a key concern area. States’ debt
consists of all liabilities that require payment of interest and or principal by the State Government at some future
date. It includes internal debt, loans and advances from the Centre and all public account liabilities such as
Provident Funds, Reserve Funds and Deposits.
V. Debt Position
Chart 10: Primary Deficit
2009-10(RE) 2005-08(Avg.)
(in per cent)
-4 -3 -2 -1 0 1 2 3 4 5 6
Himachal Pradesh
Jammu & Kashmir
Haryana
Punjab
Rajasthan
Uttar Pardesh
Uttarakhand
NCT - Delhi
All States
-1.7
-0.2
-0.9
0.3
-3.2
1.3
1.9
-1.2
-0.2
2.6
0.6
1.4
2.3
0.7
0.5
5.1
0.5
1.5
Economic Research & Policy Division -CII (NR)12
All States in the region witnessed Primary Deficits in 2009-10. Uttarakhand registered the highest Primary Deficit
of 5.1 percent of GSDP, followed by Haryana 2.6 percent.
Chart 11: Debt Burden
0.0
Himachal Pradesh
Jammu & Kashmir
Haryana
Punjab
Rajasthan
Uttar Pardesh
Uttarakhand
NCT - Delhi
All States
22.4
42.6
47.2
53.2
63.9
68.9
43.0
19.4
28.9
19.0
35.2
41.1
43.5
55.7
70.1
41.1
13.8
25.0
20.0 40.0 60.0 80.0
(in per cent)
2009-10 (RE) 2005-08 (Avg.)
TwFC Target (30.8)
Economic Research & Policy Division -CII (NR) 13
In terms of Interest Payments as a proportion of Revenue Receipts, the proportion is highest for Punjab, followed
by Himachal Pradesh and Rajasthan. Jammu & Kashmir, Haryana, Uttar Pradesh and Uttarakhand have not been
able to meet the target set by the TwFc.
It is interesting to note that these States also have the highest proportion of National Small Savings Fund (NSSF),
which typically bear higher interest burden.
All Northern States except Jammu & Kashmir registered an improvement in the Debt-GSDP ratio in 2009-10 (RE)
as compared with 2005-08 (Avg.). Uttar Pradesh registered the highest improvement of 9.7 percent of GSDP,
followed by Himachal Pradesh, 8.2 percent. However only NCT of Delhi & Haryana have a burden lower than the
all States average and are also the only Northern States which have been able to meet the target given by the
TwFC.
High debt burden usually translates into higher burden of interest payments. This widens the Revenue Deficit and
the Gross Fiscal Deficit.
Chart 12: Interest Payments to Revenue Receipts
Source: State Finances- A Study of Budgets of 2009-10 – RBI; Figures are in percent
(in percent)
13.2
17.7
12.2
12.0
13.8
10.8
18.2
13.2
18.7
10.1
14.7
0 5 1 0 1 5 2 0 2 5
Himachal Pradesh
Jammu & Kashmir
Haryana
Punjab
Rajasthan
Uttar Pardesh
Uttarakhand
22.2
23.4
21.2
TwFC Target (15.0)
2008-09 2005-08
In recent years, the debt problem of the States has taken centre stage as a key concern area. States’ debt
consists of all liabilities that require payment of interest and or principal by the State Government at some future
date. It includes internal debt, loans and advances from the Centre and all public account liabilities such as
Provident Funds, Reserve Funds and Deposits.
V. Debt Position
Chart 10: Primary Deficit
2009-10(RE) 2005-08(Avg.)
(in per cent)
-4 -3 -2 -1 0 1 2 3 4 5 6
Himachal Pradesh
Jammu & Kashmir
Haryana
Punjab
Rajasthan
Uttar Pardesh
Uttarakhand
NCT - Delhi
All States
-1.7
-0.2
-0.9
0.3
-3.2
1.3
1.9
-1.2
-0.2
2.6
0.6
1.4
2.3
0.7
0.5
5.1
0.5
1.5
Economic Research & Policy Division -CII (NR)12
All States in the region witnessed Primary Deficits in 2009-10. Uttarakhand registered the highest Primary Deficit
of 5.1 percent of GSDP, followed by Haryana 2.6 percent.
Chart 11: Debt Burden
0.0
Himachal Pradesh
Jammu & Kashmir
Haryana
Punjab
Rajasthan
Uttar Pardesh
Uttarakhand
NCT - Delhi
All States
22.4
42.6
47.2
53.2
63.9
68.9
43.0
19.4
28.9
19.0
35.2
41.1
43.5
55.7
70.1
41.1
13.8
25.0
20.0 40.0 60.0 80.0
(in per cent)
2009-10 (RE) 2005-08 (Avg.)
TwFC Target (30.8)
Economic Research & Policy Division -CII (NR) 13
In terms of Interest Payments as a proportion of Revenue Receipts, the proportion is highest for Punjab, followed
by Himachal Pradesh and Rajasthan. Jammu & Kashmir, Haryana, Uttar Pradesh and Uttarakhand have not been
able to meet the target set by the TwFc.
It is interesting to note that these States also have the highest proportion of National Small Savings Fund (NSSF),
which typically bear higher interest burden.
All Northern States except Jammu & Kashmir registered an improvement in the Debt-GSDP ratio in 2009-10 (RE)
as compared with 2005-08 (Avg.). Uttar Pradesh registered the highest improvement of 9.7 percent of GSDP,
followed by Himachal Pradesh, 8.2 percent. However only NCT of Delhi & Haryana have a burden lower than the
all States average and are also the only Northern States which have been able to meet the target given by the
TwFC.
High debt burden usually translates into higher burden of interest payments. This widens the Revenue Deficit and
the Gross Fiscal Deficit.
Chart 12: Interest Payments to Revenue Receipts
Source: State Finances- A Study of Budgets of 2009-10 – RBI; Figures are in percent
(in percent)
13.2
17.7
12.2
12.0
13.8
10.8
18.2
13.2
18.7
10.1
14.7
0 5 1 0 1 5 2 0 2 5
Himachal Pradesh
Jammu & Kashmir
Haryana
Punjab
Rajasthan
Uttar Pardesh
Uttarakhand
22.2
23.4
21.2
TwFC Target (15.0)
2008-09 2005-08
Economic Research & Policy Division -CII (NR)14
Chart 13: Share of Major Deficit Funding Instruments in Total Outstanding Liabilities
Note: Figures are as on 31 March – 2011
SDL are the State Development Loans borrowed from the markets by RBI on behalf of the respective State Government
(in per cent)
SDLs NSSF Loans from Bank and FIs
Loans from Centre Provident Fund, etc. Reserve Fund
0 20 40 60 80 100 120
Haryana
Punjab
Rajasthan
Uttar Pardesh
Himachal Pradesh
Jammu & Kashmir
Uttarakhand
Economic Research & Policy Division -CII (NR) 15
All Northern States missed their FRL targets on Fiscal Deficit in 2008-09 & 2009-10. At end of 2008-09, Jammu &
Kashmir had the highest Fiscal Deficit, 6.7 as a percentage to GSDP, among the Northern States; followed by
Himachal Pradesh, 6.2 percent, and Uttar Pradesh, 5.0 percent. However, these States improved their deficit
position as per the deficits recorded in 2009-10. The deficit situation for Uttarakhand, Rajasthan and Haryana
deteriorated in 2009-10 as compared to the average over 2005-08.
VI. Fiscal Responsibility Legislation Framework
Central Government has been operating under Fiscal Responsibility and Budgetary Management (FRBM) Act,
2003 and FRBM Rules, 2004 since 2004-05. This Act prescribed for elimination of the Revenue Deficit by 2008-09
and reduction in Fiscal Deficit by at least 0.3 percent of the GDP annually, so that Fiscal Deficit is less than 3
percent of GDP by the end of 2008-09.
On the part of the State Governments, they enacted Fiscal Responsibility Legislations (FRLs) beginning 2002. The
enactment of FRLs has provided impetus to the process of attaining fiscal sustainability. This process gathered
momentum after the TwFC recommended a debt relief mechanism linking it to the enactment of FRLs in 2004-05.
The following tables highlight the FRL targeted deficit indicators for Northern States viz a viz their performance
and the roadmap of fiscal consolidation up to 2014-15.
Table 3: FRLs and Gross Fiscal Deficit
Source: Thirteenth Finance Commission - Report
StatesTargeted Level
(as per State FRLs)
Average
(FY 2005-08)
Actual
(Accounts 2008-09)
Revised Estimates
(FY 2009-10)
Difference RE
2009-10 and
Avg. 2005-08
Haryana
Himachal Pradesh
Jammu & Kashmir
Punjab
Rajasthan
Uttar Pradesh
Uttarakhand
All States (as per the FRBM Act)
Not more than 3 percent of GSDP by March 2010.
3 percent of GSDP by March 2010. Reduce GFD/GSDP by 0.5 percent in each financial year beginning April 2006.
Contain annual growth rate of GFD to 2 percent in nominal terms till GFD is below 3 percent of GSDP
3 percent of GSDP following a path of minimum average annualreduction of 0.4 percent of GSDP.
Not more than 3 percent of GSDP by March 2009a
3 percent of GSDP by March 2009. Reduce the ratio in each financial year.
3 percent of GDP by March 2008
Reduce GFD to 3 percent of GSDP.
0.1
2.6
6.4
3.1
2.9
3.6
5.0
1.9
3.6
6.2
6.7
4.0
3.5
5.0
4.6
2.4
4.0
5.4
5.8
3.4
4.5
4.9
8.3
3.3
3.9
2.8
-0.6
0.3
1.6
1.3
3.3
1.4
Economic Research & Policy Division -CII (NR)14
Chart 13: Share of Major Deficit Funding Instruments in Total Outstanding Liabilities
Note: Figures are as on 31 March – 2011
SDL are the State Development Loans borrowed from the markets by RBI on behalf of the respective State Government
(in per cent)
SDLs NSSF Loans from Bank and FIs
Loans from Centre Provident Fund, etc. Reserve Fund
0 20 40 60 80 100 120
Haryana
Punjab
Rajasthan
Uttar Pardesh
Himachal Pradesh
Jammu & Kashmir
Uttarakhand
Economic Research & Policy Division -CII (NR) 15
All Northern States missed their FRL targets on Fiscal Deficit in 2008-09 & 2009-10. At end of 2008-09, Jammu &
Kashmir had the highest Fiscal Deficit, 6.7 as a percentage to GSDP, among the Northern States; followed by
Himachal Pradesh, 6.2 percent, and Uttar Pradesh, 5.0 percent. However, these States improved their deficit
position as per the deficits recorded in 2009-10. The deficit situation for Uttarakhand, Rajasthan and Haryana
deteriorated in 2009-10 as compared to the average over 2005-08.
VI. Fiscal Responsibility Legislation Framework
Central Government has been operating under Fiscal Responsibility and Budgetary Management (FRBM) Act,
2003 and FRBM Rules, 2004 since 2004-05. This Act prescribed for elimination of the Revenue Deficit by 2008-09
and reduction in Fiscal Deficit by at least 0.3 percent of the GDP annually, so that Fiscal Deficit is less than 3
percent of GDP by the end of 2008-09.
On the part of the State Governments, they enacted Fiscal Responsibility Legislations (FRLs) beginning 2002. The
enactment of FRLs has provided impetus to the process of attaining fiscal sustainability. This process gathered
momentum after the TwFC recommended a debt relief mechanism linking it to the enactment of FRLs in 2004-05.
The following tables highlight the FRL targeted deficit indicators for Northern States viz a viz their performance
and the roadmap of fiscal consolidation up to 2014-15.
Table 3: FRLs and Gross Fiscal Deficit
Source: Thirteenth Finance Commission - Report
StatesTargeted Level
(as per State FRLs)
Average
(FY 2005-08)
Actual
(Accounts 2008-09)
Revised Estimates
(FY 2009-10)
Difference RE
2009-10 and
Avg. 2005-08
Haryana
Himachal Pradesh
Jammu & Kashmir
Punjab
Rajasthan
Uttar Pradesh
Uttarakhand
All States (as per the FRBM Act)
Not more than 3 percent of GSDP by March 2010.
3 percent of GSDP by March 2010. Reduce GFD/GSDP by 0.5 percent in each financial year beginning April 2006.
Contain annual growth rate of GFD to 2 percent in nominal terms till GFD is below 3 percent of GSDP
3 percent of GSDP following a path of minimum average annualreduction of 0.4 percent of GSDP.
Not more than 3 percent of GSDP by March 2009a
3 percent of GSDP by March 2009. Reduce the ratio in each financial year.
3 percent of GDP by March 2008
Reduce GFD to 3 percent of GSDP.
0.1
2.6
6.4
3.1
2.9
3.6
5.0
1.9
3.6
6.2
6.7
4.0
3.5
5.0
4.6
2.4
4.0
5.4
5.8
3.4
4.5
4.9
8.3
3.3
3.9
2.8
-0.6
0.3
1.6
1.3
3.3
1.4
Northern States fared slightly better on the Revenue Deficit front, all the states except Punjab recording revenue
surpluses on an average basis, over 2005-08
Source: Thirteenth Finance Commission - Report
Table 4: FRLs and Revenue Deficit
StatesTargeted Level
(as per State FRLs)
Average
(FY 2005-08)
Actual
(Accounts 2008-09)
Revised Estimates
(FY 2009-10)
Difference RE
2009-10 and
Avg. 2005-08
Haryana
Himachal Pradesh
Jammu & Kashmir
Punjab
Rajasthan
Uttar Pradesh
Uttarakhand
All States
(as per the FRBM Act)
Nil by 2008-09 and generate Revenue Surplus thereafter.
Maintain Revenue Surplus. Initiate steps to strengthen Revenue Surplus.
Reduce Revenue Deficit to Revenue Receipts by at least 5 percentage points from the previous year, until revenue balance is achieved.
Nil by March 2009 with an average annual reduction of 3 percent in RD-RR ratio.
Nil by March 2009
Nil by March 2009. Reduce the ratio in each financial year.
Nil by March 2008
Reduce RD-RR ratio at least by 2 percentage points each year until Revenue Surplus is achieved.
-1.3
-1.2
-6.8
1.8
-0.3
-0.7
-1.5
-0.4
1.1
0.4
-9.7
2.9
0.4
-0.5
-0.6
-0.2
1.7
0.4
-11.6
2.2
1.8
-0.4
2.4
0.7
0.4
-0.8
-4.8
0.4
1.5
-0.3
0.9
0.3
The information presented in this document has been prepared by CII. This paper aims to provide
information to the user and care has been taken to make the information as accurate as possible. However,
CII does not make any representation or warranty regarding the accuracy or completeness of the information
and expressly disclaims any and all liabilities based on such information.
Disclaimer
Economic Research & Policy Division -CII (NR)16
Northern States fared slightly better on the Revenue Deficit front, all the states except Punjab recording revenue
surpluses on an average basis, over 2005-08
Source: Thirteenth Finance Commission - Report
Table 4: FRLs and Revenue Deficit
StatesTargeted Level
(as per State FRLs)
Average
(FY 2005-08)
Actual
(Accounts 2008-09)
Revised Estimates
(FY 2009-10)
Difference RE
2009-10 and
Avg. 2005-08
Haryana
Himachal Pradesh
Jammu & Kashmir
Punjab
Rajasthan
Uttar Pradesh
Uttarakhand
All States
(as per the FRBM Act)
Nil by 2008-09 and generate Revenue Surplus thereafter.
Maintain Revenue Surplus. Initiate steps to strengthen Revenue Surplus.
Reduce Revenue Deficit to Revenue Receipts by at least 5 percentage points from the previous year, until revenue balance is achieved.
Nil by March 2009 with an average annual reduction of 3 percent in RD-RR ratio.
Nil by March 2009
Nil by March 2009. Reduce the ratio in each financial year.
Nil by March 2008
Reduce RD-RR ratio at least by 2 percentage points each year until Revenue Surplus is achieved.
-1.3
-1.2
-6.8
1.8
-0.3
-0.7
-1.5
-0.4
1.1
0.4
-9.7
2.9
0.4
-0.5
-0.6
-0.2
1.7
0.4
-11.6
2.2
1.8
-0.4
2.4
0.7
0.4
-0.8
-4.8
0.4
1.5
-0.3
0.9
0.3
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