Fiscal Developments

Fiscal Policy Framework

• Stimulus measures such as direct benefit transfers to the vulnerable sections, emergency credit to the small businesses, and the world’s largest food subsidy programme targeting 80.96 crore beneficiaries enabled the creation of safety-nets, by ensuring that the essentials are taken care of.
• During the phase of economic recovery, the stimulus mix included investment boosting measures like Production Linked Incentives (PLI), steps to encourage investment in infrastructure sector and enhancing capital expenditure by the Central and state Governments

Fiscal Indicators

• The fiscal deficit of the Central Government at end November 2021 stood at 46.2 per cent of the BE compared to 135.1 per cent during the same period in 2020-21 and 114.8 per cent during the same period in 2019-20.
• Revenue receipts have grown at a much higher pace during April to November 2021 compared to the corresponding periods during the last two years.
  • Net tax revenue to the Centre, which was envisaged to grow at 8.5 per cent in 2021-22 BE relative to 2020-21 PA, grew at 64.9 per cent during April to November 2021.
  • The non-tax revenue collections up to November 2021 registered an YoY increase of 79.5 per cent.
• The expenditure policy of the government during 2021-22 has been characterized by restructuring and prioritization of spending in sectors which have a long-term impact on output.

Liabilities of Central Government

• Public Debt accounted for 89.9 per cent of total liabilities, while Public Account Liabilities, which include National Small Savings Fund, State Provident Funds, Reserve Funds and Deposits and other Accounts, constituted the remaining 10.1 per cent.
• Public debt is largely owned by institutional segments like banks, insurance companies, provident funds etc.
  • The share of commercial banks stood at 37.77 per cent; insurance companies at 25.3 per cent; provident funds at 4.44 per cent; mutual funds at 2.94 per cent and RBI at 16.2 per cent at end March-2021.

State Finances

• The Gross Fiscal Deficit of States is estimated to cross the Fiscal Responsibility Legislation (FRL) threshold of 3 per cent of GDP during 2020-21 RE and 2021-22 BE.
• The Revenue Deficit of the States also increased from 0.1 per cent of GDP in 2018-19 to 2 per cent of GDP in 2020-21 (RE).
• The net borrowing ceilings of the States were enhanced to 5 per cent of GSDP of the States for the year 2020-21 and 4 per cent of GSDP of the States for 2021-22.

Policy Measures to Enhance Efficiency of Government Spending

Government has undertaken consistent efforts to boost the efficiency of public procurement policy. Two of such reforms are:

• Government e-Marketplace: The Government in 2016 had set up a dedicated e-market known as Government e-Marketplace (GeM) for purchase of certain standard day to day use goods. The General Financial Rules 2017 mandates all Ministries and Departments to procure Goods and Services available on GeM from GeM.
• New guidelines for reforms in Public Procurement and Project Management: The government also procures non-routine Goods, Services and Works like construction of highways, buildings, hiring of consultants etc. using the Central Public Procurement Portal as per the General Financial Rules (GFR) 2017