West Bengal PUBLIC FINANCE and Fiscal Policy
West Bengal government’s finances are the worst among 5 highly-indebted states of India. the entire debt burden of province is near rupees two lakh crores implying that the debt burden of each citizen of the state is over twenty thousand rupees (The Times of India, May 30, 2011) that so is an dreadful figure. The Revenue Deficit of the state is that the highest among the 5 highly-indebted states of Uttar Pradesh, Maharashtra, West Bengal, Andhra Pradesh and Gujarat. For the year 2009-10, revenue deficit (difference between revenue earnings and Revenue Expenditure) of the state stood at a staggering Rs 17,940 crore as compared to Rs 7,123 crore for Maharashtra.
West Bengal performed poorly in most parameters compared to the larger states, its performance during this area is even worse than the questionable backward states. That West Bengal government is on the bankruptcy is well recognized by these statistics. As such, it’s not unusual for one to need to travel deeper into the state of public finances of the nation’s fourth most inhabited states so as to examine however totally different indices of state finances have fared over the last 10 years about on get a clearer image of the particular plight of government finances. This paper primarily is driven by this would like and tries to investigate the behaviour of varied economic indicators in context of state finances therefore on give a somewhat candid exposition of province in terms of state finances.
Public Finances:
Structure of State budgets before exploring the trends of government finance of West Bengal over the last decade, one should briefly discuss concerning the fundamental structure of the state budget from that totally different parts are employed in our analysis. To the current finish, we start by lightness the main heads of the state budget in accordance to reserve Bank of India’s tips. Any budget, whether or not state or federal, is generally split into 2 parts or what one could decision 2 parallel accounts, namely, the Revenue Account and therefore the Capital Account
Revenue Account
Revenue Receipts generally contain tax receipts and non-tax receipts. Total government revenue consists of state’s own tax revenue and therefore the part of central tax receipts that’s shared by the states. Non-tax revenue, similarly, contains of state’s own non-tax revenue and grants from the centre that are received by the state. The pool of state’s own tax revenue is created primarily through 3 broad sources, namely, taxes on income, taxes on property and capital and taxes on commodity and Services. Every of those classes may be classified more. Taxes on income is that the summation of agricultural Income tax and taxes on professionals, trades, callings and EMPLOYMENT. Taxes on property and capital dealings embrace land revenue, stamps and registration fees and concrete property tax.
Capital Account Total Capital receipts contains the subsequent major categories: External Debt, internal debt, loans and advances from the centre, recovery of loans and advances, inter-state settlement, contingency fund, tiny Savings and provident funds, reserve funds, deposits and advances, suspense and alternative miscellaneous things like deposits with RBI, appropriation to contingency fund, alternative miscellaneous capital receipts, and Remittances. Total capital disbursements on the opposite hand is that the summation of the subsequent items: Total Capital outlay (development and non development Capital Expenditure), discharge of internal debt, repayment of loans to the centre on account of varied loans and grants received towards central set up schemes
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Indicators of fiscal Performance to investigate the trend and current situation of state finances of the country one should first identify a stingy set of fiscal indicators which might ably replicate the condition of finances of the state. On a gross level, to understand the whole receipts of the state one may use the indices like Total revenue receipts and total capital receipts as a proportion of net State Domestic Product (NSDP). A additional micro level analysis but would demand performance of various parts of, especially, the revenue receipts as a proportion of NSDP, like movement of total tax revenue, own tax revenue, non-tax revenue etc.
On the fiscal front, there has been some easing in recent years. The State’s Fiscal Deficit (as a proportion of the GDP) declined from 4.1 per cent in 2010-11 to 3 per cent in 2014-15, and therefore the revenue deficit from 3.6 per cent to 1.3 per cent. The debt-to-GDP ratio conjointly improved from 40.7 per cent to 34.3 per cent throughout this era. it was in July 2010 that province created the primary step towards enacting the Fiscal Responsibility and Budget Management Act.
But, a lot of remains to be achieved. As other States have completely eliminated revenue deficit, province still runs a deficit on this count. Its fiscal deficit is additionally on top of the all-States Average. With expenses overshooting revenue over the years, the authorities have been on a borrowing spree: therefore the flight debt. Concerning one-fifth of the State’s disbursement on the revenue account is on interest payments.
A large a part of the matter lies within the failure of the CPI(M) government to lift decent tax revenue throughout its tenure. And there has been no vital modification since the TMC took over, means consultants. The State’s own tax revenue-to-GDP ratio, though’ up from before, continues to be below the all-States average of half-dozen.6 per cent. This can be as a result of a bit of the State’s Growth is accounted for by Services, and therefore the informal phase at that, that doesn’t fall inside the tax web. This includes the schooling trade, tiny restaurants, hotels and roadside vendors. Heavy these is so important, however a political situation.
On expenditure too, the file of both the Left and the TMC has been some distance from marvellous. Data display that the States’ social area spend as a percent of its GDP averaged five according to cent at some point of 2004-08 and 6.3 in line with cent all through 2008-10, decrease than that for similar States. While the ratio went up to six.6 according to cent during 2012-14, it changed into nevertheless under the similar State average.
Likewise, the State’s capital outlay as a Percentage of its GDP averaged 0.8 consistent with cent at some stage in 2004-2010, as against the similar State common of 2.4 consistent with cent. It changed into at 0.8 according to cent in 2012-13 too before it rose to 1.Three per cent in 2013-14. But, this was decrease than the similar State common.,
Public finance is the study of the role of government in the economy. It deals with the government’s revenue, expenditure, and borrowing. Public finance is important because it affects the overall Health of the economy.
Public revenue is the Money that the government collects from taxes, fees, and other sources. Tax revenue is the most important source of public revenue. Direct taxes are taxes that are levied on individuals, such as income tax and property tax. Indirect taxes are taxes that are levied on goods and services, such as sales tax and customs duty.
Non-tax revenue is the money that the government collects from fees, fines, interest, and royalty. Fees are charges for services that the government provides, such as driver’s licenses and passports. Fines are penalties for breaking the law. Interest is the money that the government earns on its investments. Royalty is a payment that is made to the government for the use of natural Resources, such as oil and gas.
Public expenditure is the money that the government spends on goods and services. Recurrent expenditure is the money that the government spends on day-to-day operations, such as salaries and wages, interest payment, and subsidies. Capital expenditure is the money that the government spends on long-term projects, such as Infrastructure-2/”>INFRASTRUCTURE and Education.
Fiscal policy is the government’s use of Taxation and spending to influence the economy. Fiscal policy can be used to stimulate the economy, to reduce Inflation, or to reduce the deficit.
Fiscal deficit is the difference between the government’s revenue and expenditure. Revenue deficit is the difference between the government’s tax revenue and expenditure. Primary Deficit is the difference between the government’s revenue and expenditure, excluding interest payment.
The Fiscal Responsibility and Budget Management Act (FRBM Act) is an act of the Parliament of India that was enacted in 2003. The FRBM Act aims to ensure fiscal discipline and transparency in the management of public finances. The FRBM Act sets targets for the fiscal deficit and revenue deficit.
The West Bengal State Budget is the annual financial statement of the Government of West Bengal. The West Bengal State Budget is presented by the Finance Minister of West Bengal in the West Bengal Legislative Assembly. The West Bengal State Budget is divided into two parts: the Revenue Budget and the Capital Budget. The revenue budget deals with the government’s revenue and expenditure for the current financial year. The capital budget deals with the government’s capital expenditure for the current financial year.
The West Bengal State Budget is an important document because it outlines the government’s plans for the coming financial year. The West Bengal State Budget is also important because it affects the overall health of the West Bengal 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. The government can use fiscal policy to stimulate the economy during a Recession or to slow down the economy during a period of high inflation.
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?
Government spending can be divided into two categories: discretionary spending and mandatory spending. Discretionary spending is spending that is authorized by Congress each year. Mandatory spending is spending that is required by law, such as Social Security and Medicare.
What is the national debt?
The national debt is the total amount of money that the government owes. The government borrows money by selling Treasury Bonds. The national debt has been increasing in recent years, and it is now over $30 trillion.
What are the different ways to reduce the national debt?
There are several ways to reduce the national debt. The government can raise taxes, cut spending, or both. The government can also sell assets, such as land or buildings.
What are the benefits of reducing the national debt?
Reducing the national debt can have several benefits. It can lower interest rates, which can make it cheaper for businesses to borrow money and invest. It can also make the government more financially stable.
What are the drawbacks of reducing the national debt?
Reducing the national debt can also have some drawbacks. It can lead to higher taxes, which can reduce economic growth. It can also lead to cuts in government spending, which can hurt some people.
What is the future of public finance?
The future of public finance is uncertain. The government will need to find ways to reduce the national debt, but it will also need to make sure that it has enough money to provide essential services. The government will also need to deal with the challenges of an aging Population and Climate change.
Sure, here are some MCQs on the topic of public finance and fiscal policy:
Which of the following is not a function of government?
(A) Providing public goods and services
(B) Regulating the economy
(C) Collecting taxes
(D) Investing in infrastructureThe government’s budget is a statement of its:
(A) Income and expenses
(B) Assets and liabilities
(C) Revenue and expenditures
(D) Receipts and disbursementsThe government’s fiscal policy is its:
(A) Plan for raising and spending money
(B) Strategy for managing the economy
(C) Approach to regulating the market
(D) Policy on taxation and spendingWhich of the following is a type of government expenditure?
(A) Transfer Payments
(B) Capital expenditures
(C) Current expenditures
(D) All of the aboveWhich of the following is a type of government revenue?
(A) Taxes
(B) Fees
(C) Fines
(D) All of the aboveThe government’s budget deficit is the amount by which:
(A) Its expenditures exceed its revenues
(B) Its revenues exceed its expenditures
(C) Its assets exceed its liabilities
(D) Its liabilities exceed its assetsThe government’s budget surplus is the amount by which:
(A) Its expenditures exceed its revenues
(B) Its revenues exceed its expenditures
(C) Its assets exceed its liabilities
(D) Its liabilities exceed its assetsThe government’s national debt is the total amount of money that it owes:
(A) To its citizens
(B) To other countries
(C) To both its citizens and other countries
(D) To no oneThe government’s debt-to-GDP ratio is the amount of its debt divided by its:
(A) GDP
(B) GNI
(C) GNP
(D) None of the aboveWhich of the following is a way that the government can reduce its debt?
(A) Raise taxes
(B) Cut spending
(C) Both raise taxes and cut spending
(D) Neither raise taxes nor cut spending
I hope these MCQs were helpful!