State of the economy:-
- According to 14th Planning Commision, During the last two plan periods, Chhattisgarh had achieved a Growth rate comparable to national level. For the first two years of Twelfth plan, its growth rate had been better than that of all India. Primary Sector provides sustenance to nearly 80 per cent of the Population and contributes nearly 30 per cent to GSDP. However, with 70 per cent area under rain-fed agriculture, uncertain monsoon conditions affect the income of rural population.
- The contribution of Secondary Sector to the GSDP has, in recent years, declined in terms of Percentage, despite the fact that the state is very rich in mineral Resources. The decline is mainly on account of continuing slowdown in the manufacturing sector. Tertiary Sector has increased its share in the GSDP; the growth however is constrained by low per capita income.
- Chhattisgarh continues to have relatively low per capita income which is less than half of Gujarat, Maharastra, Haryana, Kerala, and Tamilnadu, among the major states. Worst still, during the last ten years, the inter-state disparity in the per capita income has widened further. POVERTY estimates released by Planning Commission in July 2013 reveals that Chhattisgarh has the highest percentage of persons living below Poverty Line (39.93 per cent).
Fiscal Situation:-
Chhattisgarh passed the Financial Responsibility and Budget Management Act (FRBM) in 2005. Earlier, the Central Government passed the Act in 2003. Among the objectives of this legislation has been fiscal transparency, conduct of Fiscal Policy in medium term framework, and long term macro-economic stability. In concrete terms, a roadmap was to be prepared to bring down the Revenue Deficit of the Central Government to zero by March 2008 and Fiscal Deficit to be brought down to less than 3 per cent of GDP. However, this has not happened. Revenue and fiscal deficits of the Centre have continued to surge, breaching the 3% ceiling. The State has adhered to the targets set out under its FRBM Act. However, the fiscal performance of the states is dependent on the performance of the Central 
Government. Accordingly, macro-economic management of the Centre affects the states’ budgetary resources and expenditure. A mechanism has, therefore, to be evolved to ensure that the Central Government follows the discipline it imposes on the states. 14th finance Commision suggested the 3 per cent ceiling prescribed for fiscal deficit under FRBM Act needs to be relaxed for states like Chhattisgarh, keeping in view the present level of debt sustainability and also the massive investments requirements of the State. The state should therefore be allowed the flexibility to go for sustainable borrowings as per its development requirements. If this suggestion is not acceptable, the borrowing ceiling may be upscaled to 5 percent of GSDP. However Performance of the State has been good in fiscal management:-
- Chhattisgarh has been rated among the best performing states in fiscal management in the RBI Study of State Finances. It has consistently achieved a relatively high tax GSDP ratio of 8 per cent which ranks it among the top four states, a healthy tax buoyancy of 1.6 and has generated uninterrupted revenue surplus. Its debt GSDP as well as interest payment-GSDP ratio continues to be the lowest among the non-special category states.
- The problem had been compounded by the shortfall in fiscal transfers from the centre due to its falling Revenue Receipts, coupled with hardening of cost of borrowing for the states because of excess market borrowing by the centre to finance its uncontrolled deficits, thereby adversely affecting the available resources for financing its developmental needs. In effect, the State’s finances were under severe Stress, making it difficult for the government to adhere to FRBM targets. It ended up FY 2013-14 with a revenue deficit of Rs. 726 crore, a situation arising after a gap of ten successive years of revenue surplus, mainly because of shortfall of Rs.713 crore in share of central taxes.
- In addition, Centre’s recent decision to set up the Seventh Central Pay Commission would also impact States’ finances, spreading over the Commission’s award period, which have not been factored by any State. This aspect needs to be kept in mind while determining States’ share in the divisible pool.
Therefore, there is a strong case for adequate financial support to the state so as to achieve a greater degree of equalization in providing a standard level of Public Service and step up its growth momentum.
Deficits, Debts and FRBM Targets for 2017-18:-
The Fiscal Responsibility and Budget Management (FRBM) Act, 2005 of Chhattisgarh provides annual targets to progressively reduce the outstanding liabilities, revenue deficit and fiscal deficit of the State Government.
Revenue deficit:
It is the excess of Revenue Expenditure over revenue receipts. A revenue deficit implies that the government needs to borrow in order to finance its expenses which do not create capital assets. However, the budget estimates a revenue surplus of Rs 4,781 crore (or 1.73% of GSDP) in 2017-18. This implies that revenue receipts are expected to be higher than the revenue expenditure, resulting in a surplus. The estimate indicates that the state is meeting the target of eliminating revenue deficit, as prescribed by the 14th Finance Commission.
Fiscal deficit:
It is the excess of total expenditure over total receipts. This gap is filled by borrowings by the government, and leads to an increase in total liabilities of the government. A high fiscal deficit may imply a higher repayment obligation for the state in the future. In 2017-18, fiscal deficit is estimated to be Rs 9,647 crore, which is 3.49% of the GSDP. During 2016-17, fiscal deficit is estimated to be Rs 7,688 crore, which is 2.92% of GSDP, higher than the budget estimate of 2.88%.
Outstanding Liabilities: It is the accumulation of borrowings over the years. In 2017-18, the outstanding liabilities are expected at 18.47% of GSDP.
Receipts in 2017-18:-
- The total revenue receipts for 2017-18 are estimated to be Rs 66,094 crore, an increase of 5.3% over the revised estimates of 2016-17.
- State’s tax revenue is expected to increase by 3% (Rs 687 crore) in 2017-18 over the revised estimates of 2016-17. The tax to GSDP ratio is targeted at 8.5% in 2017-18, which is lower than the revised estimate of 8.7% in 2016-17. This implies that growth in collection of taxes is expected to be lower than the economic growth estimated.
- Non-tax revenue in 2017-18 is estimated to increase by 2.4% (Rs 184 crore) over the revised estimates of 2016-17. Chhattisgarh’s interest earnings are expected to reduce by 43% from the revised estimates of 2016-17, to Rs 143 crore.
- Grants from the centre are expected to increase by 2.8%, from Rs 13,722 crore in 2016-17 (RE), to Rs 14,101 crore in 2017-18. The other component of transfers from the centre is the state’s share in central taxes, which is estimated to increase by 10.9%, to Rs 20,868 crore in 2017-18.
Tax Revenue: Sales Tax is expected to be the largest component (57%) of the tax revenue, with an estimated collection of Rs 13,445 crore. Sales Tax collections are expected to increase by 8% over the revised estimates of 2016-17. Note that GST is expected to be introduced in 2017-18. It will subsume taxes such as Sales Tax and Entertainment Tax (unless levied by local bodies). Whether the roll-out of GST will increase tax collections will become clear in due course of time. Rs 3,169 crore is expected to be generated from the levy of Excise Duty. In addition, Rs 1,767 crore will be collected by levying taxes on entry of goods and passengers.
Non Tax Revenue: Chhattisgarh has estimated to generate Rs 7,704 crore through non-tax sources in 2017- 18. This includes Rs 5,600 crore through mining and metallurgical industries.
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PUBLIC FINANCE is the study of the government’s revenue and expenditure. It is concerned with how the government raises Money and how it spends it. Public finance is a branch of economics that deals with the financial activities of the government. It includes the study of government revenues, expenditures, and debt.
Public revenue is the money that the government receives from taxes, fees, and other sources. Tax revenue is the most important source of public revenue. It is collected from individuals and businesses. Non-tax revenue includes fees, fines, and interest income.
Public expenditure is the money that the government spends on goods and Services. It includes spending on Education, Health, defense, and Infrastructure-2/”>INFRASTRUCTURE. Capital Expenditure is spending on long-term assets, such as roads and bridges. Recurrent expenditure is spending on day-to-day operations, such as salaries and wages.
Fiscal policy is the government’s use of Taxation and spending to influence the economy. The goal of fiscal policy is to promote economic growth, stability, and full EMPLOYMENT. Fiscal policy can be used to stimulate the economy during a Recession or to restrain the economy during an inflationary period.
Fiscal deficit is the difference between the government’s revenue and expenditure. A fiscal deficit occurs when the government spends more than it receives in revenue. The government can finance a fiscal deficit by borrowing money or by printing money.
Public Debt is the total amount of money that the government owes. It includes both short-term and long-term debt. The government borrows money to finance its fiscal deficit. Public debt can be a problem if it becomes too large. A large public debt can lead to higher interest rates and Inflation.
The Fiscal Responsibility and Budget Management Act (FRBM Act) is an Indian law that was enacted in 2003. The FRBM Act aims to promote fiscal discipline and transparency in the government’s finances. The FRBM Act sets limits on the government’s fiscal deficit and public debt.
Fiscal Consolidation is a process of reducing the government’s fiscal deficit. Fiscal consolidation can be achieved by raising taxes, cutting spending, or both. Fiscal consolidation can be difficult to achieve, but it is important to maintain a healthy public finances.
Fiscal transparency is the openness and clarity with which the government reports its financial information. Fiscal transparency is important for several reasons. First, it allows citizens to hold the government accountable for its spending. Second, it helps investors to make informed decisions about whether to invest in the country. Third, it helps to attract foreign Investment.
In conclusion, public finance is a complex and important topic. It is important to understand the government’s revenue and expenditure, as well as its fiscal policy. Fiscal policy can be used to promote economic growth, stability, and full employment. Fiscal deficit, public debt, and the FRBM Act are all important concepts in public finance. Fiscal transparency is also important for a healthy economy.
What is public finance?
Public finance is the study of the government’s revenues and expenditures. It includes the study of how the government raises money, how it spends money, and how it manages its debt.
What is fiscal policy?
Fiscal policy is the use of government spending and taxation to influence the economy. It is one of the two main tools that governments use to manage the economy, along with Monetary Policy.
What are the different Types of Taxes?
There are many different types of taxes, but the most common are income taxes, sales taxes, and property taxes. Income taxes are taxes on the income that people earn. Sales taxes are taxes on the goods and services that people buy. Property taxes are taxes on the value of the property that people own.
What are the different Types of government spending?
There are many different types of government spending, but the most common are on social programs, defense, and infrastructure. Social programs are programs that provide assistance to people in need, such as Social Security and Medicare. Defense spending is spending on the military. Infrastructure spending is spending on things like roads, bridges, and Airports.
What is the national debt?
The national debt is the total amount of money that the government owes. It is the sum of all the money that the government has borrowed over the years.
What is the budget deficit?
The budget deficit is the amount of money that the government spends in a year that is more than the amount of money that it takes in. It is the difference between the government’s revenues and expenditures.
What is the budget surplus?
The budget surplus is the amount of money that the government takes in in a year that is more than the amount of money that it spends. It is the difference between the government’s revenues and expenditures.
What is the balanced budget?
A balanced budget is a budget in which the government’s revenues and expenditures are equal.
What is the fiscal year?
The fiscal year is the 12-month period that the government uses to track its revenues and expenditures. The fiscal year in the United States runs from October 1 to September 30.
What is the government’s role in the economy?
The government has a number of roles in the economy. It provides goods and services, such as education, healthcare, and infrastructure. It regulates the economy to protect consumers and businesses. It redistributes income to help reduce poverty and inequality. And it stabilizes the economy by using fiscal and monetary policy.
What are the benefits of government spending?
Government spending can provide a number of benefits, such as:
- Increased economic growth: Government spending can increase economic growth by stimulating demand and investment.
- Improved infrastructure: Government spending can improve infrastructure, such as roads, bridges, and airports, which can boost economic growth.
- Increased social welfare: Government spending can increase social welfare by providing programs such as Social Security and Medicare.
- Reduced inequality: Government spending can reduce inequality by providing programs such as food stamps and Medicaid.
What are the costs of government spending?
Government spending can also have a number of costs, such as:
- Increased debt: Government spending can increase the national debt, which can lead to higher interest rates and inflation.
- Reduced economic efficiency: Government spending can reduce economic efficiency by distorting the market and creating a disincentive to work.
- Increased taxes: Government spending can lead to higher taxes, which can reduce economic growth.
- Reduced individual freedom: Government spending can reduce individual freedom by increasing the size and scope of government.
What is the optimal level of government spending?
The optimal level of government spending is the level at which the benefits of government spending outweigh the costs. This level of spending will vary depending on the specific circumstances of each country.
What are the challenges of fiscal policy?
Fiscal policy is a complex tool that can be difficult to use effectively. Some of the challenges of fiscal policy include:
- Time lags: It can take time for fiscal policy to have an impact on the economy.
- Uncertainty: It is difficult to predict how the economy will respond to fiscal policy.
- Political constraints: Fiscal policy is often constrained by political factors, such as the need to win Elections.
- International factors: Fiscal policy can be affected by international factors, such as the global economy.
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Which of the following is not a source of revenue for the Chhattisgarh government?
(A) Taxes
(B) Non-tax revenue
(C) Loans
(D) Grants -
The Chhattisgarh government’s expenditure is classified into which of the following categories?
(A) Revenue expenditure
(B) Capital expenditure
(C) Both revenue and capital expenditure
(D) None of the above -
The Chhattisgarh government’s fiscal deficit is defined as the difference between its
(A) Revenue receipts and revenue expenditure
(B) Capital receipts and capital expenditure
(C) Revenue receipts and total expenditure
(D) Total receipts and total expenditure -
The Chhattisgarh government’s fiscal deficit is financed through
(A) Borrowing
(B) Disinvestment
(C) Both borrowing and disinvestment
(D) None of the above -
The Chhattisgarh government’s debt is defined as the total amount of money it owes to its creditors.
(A) True
(B) False -
The Chhattisgarh government’s debt is classified into which of the following categories?
(A) Internal debt
(B) External Debt
(C) Both internal and external debt
(D) None of the above -
The Chhattisgarh government’s debt is a burden on the state’s economy because
(A) It has to be repaid with interest
(B) It crowds out private investment
(C) It increases the state’s borrowing costs
(D) All of the above -
The Chhattisgarh government’s debt is sustainable if
(A) The state’s debt-to-GDP ratio is declining
(B) The state’s debt-service ratio is declining
(C) The state’s revenue growth is higher than its debt growth
(D) All of the above -
The Chhattisgarh government’s fiscal policy is aimed at
(A) Promoting economic growth
(B) Reducing poverty
(C) Maintaining macroeconomic stability
(D) All of the above -
The Chhattisgarh government’s fiscal policy is implemented through
(A) Taxation
(B) Spending
(C) Borrowing
(D) All of the above