Abstract
This paper aims to highlight cash and debt management scenario of states in India. Each of the states is in different situations in terms of debt and deficit management and fiscal space. There has been a sharp increase in the level of debt of states because of poor revenue performance. State governments cannot raise external loans, but as resources are directly transferred to the states in recent years, risks and benefits are borne by the states now. Inflexible sources of borrowings, debt ceiling, and interest rates on state securities make the job of state governments much more complicated and challenging.
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Notes
- 1.
The division of taxation powers is slightly more complicated and is not dealt in detail here separately. The distribution of revenues between Union and States is primarily governed by Sections 268–281 of the Constitution of India.
- 2.
Another method of sale of State Securities that was being followed by RBI was sale on tap where the rates were fixed by giving a spread over Central securities and the tap was kept open for a few days. This system has now been phased out.
- 3.
Internal liabilities include?
- 4.
The rates on small savings are now market linked based on the recommendations of Shyamala Gopinath Committee but the new system has some inbuilt inherent lags which is difficult to address any further.
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© 2016 Springer India
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Pandey, R. (2016). Cash and Debt Management in States. In: Singh, C. (eds) Public Debt Management. India Studies in Business and Economics. Springer, New Delhi. https://doi.org/10.1007/978-81-322-3649-8_4
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DOI: https://doi.org/10.1007/978-81-322-3649-8_4
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Publisher Name: Springer, New Delhi
Print ISBN: 978-81-322-3647-4
Online ISBN: 978-81-322-3649-8
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