An autonomous research institute under the Ministry of Finance


Restructuring the Public Finances of Tripura

Publication date

Aug, 2004


Report submitted to the Government of Tripura


Indira Rajaraman, Lekha S. Chakraborty, Deepti Jain


The worsening of fiscal indicators since 1999-00 called urgently for a fiscal reform programme, aligned with a fiscal responsibility bill. A draft Fiscal Responsibility Bill was designed and fully drafted, scheduled to come into operation on April 1, 2005, and ending on March 31, 2010. This was fully coterminous with the award period of the Twelfth Finance Commission and anticipated the requirement placed by the TFC on all states. Annual path limits on the revenue deficit are specified in the form of two options. The choice between these options is vested with the state government. Simulations of expenditure compression under the two options are performed to enable the choice. The report also examines the debt swap scheme of the Government of India (GoI), in which Tripura has been a participant. Since the interest bill itself accounts for only 15 percent of revenue expenditure in Tripura, fiscal restructuring efforts have to be focused largely on non-interest expenditure, and on own revenue, both of which do fall entirely within the control of the state. The report makes a number of suggestions in respect of both these imperatives. The report also evaluates the debt swap scheme of the centre; examines avenues for enhancement of own revenue; and estimates staff redundancy by department. Finally, the report examines nineteen non-departmental PSUs, and suggests reform measures for each including, but not confined to, manpower reduction.

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