A number of social and economic services are provided both at the Centre and in States for which rates of recovery of costs could improve through better user charges
A number of social and economic services are provided both at the Centre and in States for which rates of recovery of costs could improve through better user charges.
Revenue from non tax sources could increase with better policies in the use of scarce resources/assets of the nation. The increasing use of auction mode in this regard would help garner resources.
Switzerland 4:
Report by the Secretariat: I. Economic Environment: (3) Fiscal Policy: Para. 23:
Switzerland has made very good experiences with the so called "debt break mechanism" in public finances introduced into the Federal Constitution by popular vote in 2001. Since "[t]here are no explicit debt caps or limits" in India, we were wondering, whether discussions are going on in India at the moment, to introduce such a mechanism in order to promote a financially sustainable management of public finances. Is India intending to introduce such a capping mechanism to limit its public debt?
Reply: The FRBM (Fiscal Responsibility Budget Management) Rules 2004 contain an incremental assumption rule for public debt which states that "the Central Government shall not assume additional responsibilities (including external debt at current exchange rate) in excess of 9% of GDP for the financial year 2004 05 and in each subsequent financial year, the limit of 9% of GDP shall be progressively reduced by at least one percentage point of GDP". Hence a limit is set on public debt as a proportion of GDP. Through limiting the growth of public debt relative to growth in nominal GDP or through lower assumption of incremental liabilities or retirement of debt, the public debt would decline to sustainable levels in reasonable time. The suggested roadmap on fiscal consolidation will help in reducing the debt to GDP ratio from 44.2% in BE 2011 12 to 41.5% by 2013 14.
The FRBM rules prescribe a cap of 0.5% of GDP in any financial year on the quantum of guarantees that the Central Government can assume in a particular financial year which would put a limit on the stock of contingent liabilities and for better management of contingent liabilities the government guarantee policy has been framed which lays down the principles to streamline the liability management by the Government.
