What is State Government Finances?
Historical Background
Key Points
8 points- 1.
States' revenue sources include State GST (SGST), stamp duty, excise duty on liquor, and land revenue
- 2.
Expenditure includes developmental spending (education, health, infrastructure) and non-developmental spending (salaries, pensions, interest payments)
- 3.
States can borrow from the market through State Development Loans (SDLs)
- 4.
Finance Commission recommends the share of taxes to be devolved to states
- 5.
States' fiscal health is monitored by the RBI and the CAG
- 6.
States have the power to legislate on subjects in the State List of the Constitution
- 7.
Grants-in-aid are provided by the Centre to states under Article 275 of the Constitution
- 8.
States' borrowing is subject to limits set by the Centre under Article 293 of the Constitution
Visual Insights
Understanding State Government Finances
Key components of state government finances relevant for UPSC preparation.
State Government Finances
- ●Revenue Sources
- ●Expenditure
- ●Fiscal Responsibility
- ●Finance Commission
Recent Developments
5 developmentsIncreased reliance on own tax revenue by states
Debate on compensation to states for GST revenue shortfall
Focus on improving fiscal transparency and accountability in state finances
States undertaking reforms to improve ease of doing business and attract investment
Impact of COVID-19 pandemic on state finances - increased borrowing and reduced revenue