Lok Sabha Question No. 4274 (UNSTARRED), answered on 2017-08-11
Subject: Fiscal Deficit
Ministry: FINANCE
Asked by: M. VEERAPPA MOILY

- (a)   whether the Government has taken note of change in Gross Domestic Product (GDP) and Fiscal Deficit of Centre and States/UTs from 2012-13 to 2016-17;
- (b)  if so, the details thereof and the reasons for this fiscal deficit;
- (c)    whether some of the States/Union Territories (UTs) have become ineligible for additional market borrowings as they are not compliant with fiscal prudence norms prescribed by the 14th Finance Commission, if so, the details thereof along with the public  debt  position  of  States  such  as  Maharashtra,  Uttar  Pradesh,  Tamil  Nadu, Rajasthan, Haryana and Andhra Pradesh; and
- (d)  whether  the  Government  has  implemented  the  recommendations  of  Shri  N.K. Singh Committee for gradual reducing of the Centre's Fiscal Deficit to 2.5 per cent of GDP and Revenue Deficit to 0.8 per cent by 2022-23 and if so, the details thereof?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI ARJUN RAM MEGHWAL)

- (a) and (b): The Gross Domestic Product (GDP) at current and constant prices during 2012-13 to 2016-17 is presented in the following table.

| Gross Domestic Product (GDP) (Rs Crore)   | Gross Domestic Product (GDP) (Rs Crore)   | Gross Domestic Product (GDP) (Rs Crore)   | Gross Domestic Product (GDP) (Rs Crore)   | Gross Domestic Product (GDP) (Rs Crore)   | Gross Domestic Product (GDP) (Rs Crore)   |
|-------------------------------------------|-------------------------------------------|-------------------------------------------|-------------------------------------------|-------------------------------------------|-------------------------------------------|
|                                           | 2012-13                                   | 2013-14                                   | 2014-15                                   | 2015-16                                   | 2016-17                                   |
| GDP at constant prices                    | 9213017                                   | 9801370                                   | 10536984                                  | 11381002                                  | 12189854                                  |
| GDP at current prices                     | 9944013                                   | 11233522                                  | 12445128                                  | 13682035                                  | 15183709                                  |

Source:

Central Statistics Office

The fiscal deficit of the Centre as percentage of GDP declined from 4.9 per cent in 2012-13 to 4.5 per cent in 2013-14, and further to 4.1 per cent, 3.9 per cent and 3.5 per  cent  (provisional  actual)  respectively  in  2014-15,  2015-16  and  2016-17.  The Government is committed to the policy of fiscal rectitude. As per the information from the  Reserve  Bank  of  India's  'State  Finances:  A  Study  of  Budgets  of  2016-17',  the fiscal deficit of the States as percent of Gross State Domestic Product (GSDP) stood at  2  per  cent,  2.2  per  cent  and  2.6  per  cent  in  2012-13,  2013-14  and  2014-15 respectively, which increased to 2.9 per cent (without the UDAY liabilities) in 2015-16 (Revised estimates). The State Budgets, in general, expanded in 2015-16, both on account of capital and current spending. Fiscal deficit to GSDP ratio declined to 2.7 per  cent  (without  the  UDAY  liabilities)  in  2016-17  (revised  estimates,  based  on information from 25 States).

- (c):  Fourteenth  Finance  Commission  (FFC)  has  anchored  fiscal  deficit  of  all  the States to an annual limit of 3 per cent of Gross State Domestic Product (GSDP). In addition, the eligible States were allowed additional Fiscal Deficit of 0.5 per cent of GSDP for 2016-17 over and above the normal limit of 3 per cent on achievement of prescribed Fiscal Road Map recommended by FFC for availing additional borrowing space.  The  additional  fiscal  space  shall  be  subject  to  the  States  amending  their FRBM Acts to provide for the statutory flexible limits on fiscal deficit subject to criteria prescribed  by  FFC. Based  on  the  above  criteria,  seven  States  including  Madhya

Pradesh,  Meghalaya,  Odisha,  Sikkim,  Telangana,  Uttar  Pradesh  and  Bihar  were eligible and given permission for additional borrowings over and above 3 per cent of GSDP during 2016-17.

The outstanding liabilities of the State Governments (As at end March--Rs. in lakh crore)  of  Andhra  Pradesh,  Haryana,  Maharashtra,  Rajasthan,  Uttar  Pradesh  and Tamil Nadu are presented in the following table.

| Outstanding liabilities of the State Governments (Rs. in lakh crore)   | Outstanding liabilities of the State Governments (Rs. in lakh crore)   | Outstanding liabilities of the State Governments (Rs. in lakh crore)   |
|------------------------------------------------------------------------|------------------------------------------------------------------------|------------------------------------------------------------------------|
| Name of the State                                                      | 2016 (RE)                                                              | 2017 (BE)                                                              |
| Andhra Pradesh                                                         | 1.405                                                                  | 1.609                                                                  |
| Haryana                                                                | 1.255                                                                  | 1.442                                                                  |
| Maharashtra                                                            | 3.533                                                                  | 3.940                                                                  |
| Rajasthan                                                              | 2.098                                                                  | 2.328                                                                  |
| Tamil Nadu                                                             | 2.168                                                                  | 2.561                                                                  |
| Uttar Pradesh                                                          | 4.067                                                                  | 4.582                                                                  |
| Source: Reserve Bank of India                                          | Source: Reserve Bank of India                                          | Source: Reserve Bank of India                                          |

(d):  The Government has not yet implemented the recommendations of the FRBM Review Committee chaired by Shri N.K. Singh.

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