The Reserve Bank of India on Wednesday said that income support schemes and farm loan waivers will cause fiscal slippages in the states. The observations were made during a meeting between RBI Governor Shaktikanta Das, deputy governors and members of the 15th Finance Commission, a government press release said.
“Fiscal deficit of states is budgeted to be lower in 2019-’20 budget estimates, but revised estimates and actuals deviate significantly,” it said. It added that outstanding debt as a percentage of Gross Domestic Product has been rising.
Das also raised the matter of setting up state finance commissions, public sector borrowings and the continuity of the finance commission, the press release said. It said that such continuity was necessary due to the fiscal management requirements of the states.
In its presentation, the RBI also spoke about cash management, pointing out that states need to improve their capabilities of forecasting their cash needs. The Finance Commission headed by NK Singh met senior economists on Wednesday, and will meet top bankers on Thursday.
BJP-ruled states have and the Centre have announced sops for farmers to relieve agrarian distress. On the other hand, Congress governments which came to power in Rajasthan, Madhya Pradesh and Chhattisgarh have partially waived off farm loans.
In its February 1 budget, the Centre had promised that small farmers would get Rs 6,000 per year in their bank accounts in three equal instalments. Beneficiaries will get the amount from December 1, 2018, retrospectively.
The Congress, on the other hand, has announced that it will launch the Nyuntam Aay Yojana if it comes to power following the Lok Sabha elections. According to the scheme, the poorest 20% of families will get Rs 72,000 per year deposited in their bank accounts.