RBI warns Finance Commission of rising fiscal slippages by states

13 MAY,2019 | MEDC


 

RBI has said that state finances are being increasingly saddled with farm loan waivers, income support schemes, and the UDAY bonds for their power distribution companies. In a meeting between members of the 15th Finance Commission and the RBI brass (including the Governor), the Central Bank listed out some specific factors driving fiscal slippages in the economy. The RBI said that the shift in the composition of government finances has led to a rise in the financial importance of states. In the larger national interest, it is necessary for all states to remain prudent in their expenditure patterns, despite the fact that good politics often necessitates poor economics, especially in an election year.

*Photo Credit: Google

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