Enforce fiscal discipline in states: NCAER

WITH STATES ACCOUNTING for a third of India's burgeoning public debt and only about half of them exhibiting fiscal prudence, a National Council of Applied Economic Research (NCAER) paper has recommended that the Finance Commission use fiscal "grand bargain" for debt relief to heavily indebted states in return for conceding additional central government oversight.

- FE BUREAU

The State of the States: Federal Finance in India report by NCAER points to reforms to strengthen fiscal discipline at the state level as high level of public debt limits their ability to fund social and developmental needs. One of the key recommendations of the authors is to enhance institutional capacity, with each state creating its own independent fiscal council comprising academics, financial market participants and other experts. Their reports would assess the realism of state government forecasts of revenues and expenditures and offer forecasts of their own.