The objective of this study was to assess the status of human development in India against stated goals (state level/national/MDGs), estimate the costs of covering the remaining part, and suggest ways of bridging the financial resource gap including ways of devising fruitful partnerships between the government and the private sector.

The work involved assessing progress of the state government in achieving the targets under the FRBM Act in the state of Haryana.

This study examined the regional distribution of central government expenditure taking states as units of distribution to understand whether central expenditure is fiscally equalising. The study also examined whether progressive distribution of resources recommended by successive Finance Commissions have been offset by other forms of transfer and central expenditure.

The study presents the estimate of implicit subsidy at the aggregate (sectoral) level for four sectors namely, drinking water, irrigation, power, and road transport. Specific services in power and road transportation sectors have also been analysed to draw practicable reform directions to the Finance Department, Government of Rajasthan.

This study attempts to assess the statewise impact of central tax preferences. Since there are a large number of tax preferences, an attempt has been made to assess and allocate the impact of some of the major tax preferences. It is found that if the preferences specifically targeted towards the backward areas are not included, there is a bunching of incentives in higher income states. However, some of this impact is neutralized by the benefits accruing on account of the incentives provided to backward areas.

The objective of the study is to prepare Fiscal Responsibility and Budget Management Act and also to prepare a Medium Term Fiscal Plan for the state.

The project involves preparing a survey article on fiscal federalism in India and identifying areas of reform. The study highlights the policy and institutional shortcomings in Indian fiscal federalism in terms of the assignment system and intergovernmental transfers. Focus areas include impediments to internal trade and allocative distortions, sources of tax and expenditure inefficiency and multiplicity of transferring agencies, poor structure of incentives, and inability of the transfer system to offset disabilities of poorer states.

The objective is to provide a basis for measurement and monitoring of public financial management (PFM) performance of the country at union level over time. The PFM assessment of the country at the union level will be carried out using the PEFA Framework (Public Expenditure and Financial Accountability – World Bank) to prepare a PFM Progress Report showing the rating for each of the performance measurement indicator.

This study provides an assessment of the impact of the incentive schemes in income tax and excise duty for encouraging investment in backward areas of northern states, such as, Himachal Pradesh, Jammu and Kashmir, and Uttarakhand. The study indicates that there is little to suggest long-term sustainability of the investment that came in response to the incentive regimes. The underlying constraints like infrastructure bottlenecks in Himachal Pradesh would limit the benefit that the state can derive in the long-run.

This study was undertaken at the behest of the Department of Finance, Government of Jharkhand. The study focuses on the major taxes of the state and seeks to identify measures: both in policy, and in the administration of the tax for augmenting the revenue potential and revenue collections of the state. The study refers to the year 2008-09.:

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This paper uses a modified tax receipts forecasting model to incorporate GDP growth rate explicitly. The method of obtaining projections is also modified to use actual tax collection patterns in Q3 and Q4.

The study is a part of the major report of the World Bank, entitled, “India: Impact of Financial Crisis and Opportunity”. The study examines the prevailing fiscal policy challenges in the country in the context of global financial crisis both in terms of fiscal imbalance and fiscal space and goes on to identify areas of short-term and long-term fiscal reforms.:

Making cities and towns “slum-free” and ensuring that no new slum settlements crop up form the centerpiece of the proposed national urban poverty reduction strategy. This study, undertaken for the Ministry of Housing and Urban Poverty Alleviation, takes the position that economic growth is central to poverty reduction; however, urban poverty is an outcome not of merely economic, but social, physical, and political processes. Fighting urban poverty and these processes means giving to the urban poor recognition, security, and stability. The study suggests (i) establishment of a 10-year national programme for slum renewal and redevelopment; (ii) a safety net for the urban poor, designed to mitigate the possible adverse effect of economic meltdown and of reform measures; and (iii) laying down a policy to bring additional lands into the urban fold.

At the behest of the Thirteenth Finance Commission, the NIPFP undertook this study to assess the untapped potential of property taxation in India. Field data was collected from all metropolitan cities and a few cities in the population range of 500,000 to 1 million. The study gave a number of specific recommendations on tapping the potential and the need to establish state-level bodies to ensure uniformity in the assessment of values of properties.

It examines the human development challenges for Kerala in the context of Eleventh Plan and suggests reform measures to strengthen the State Plan for human development, taking into consideration the unique development experience of Kerala and its second generation problems of human development.

Three distinct outputs/papers are prepared on (i) an update on the centre and state finances focusing on key issues; (ii) an analysis of the effectiveness of current subsidy expenditures; and (iii) a critical review of the infrastructure spending in key sectors, and how the Government of India might prioritise at a time when fiscal space is limited.

Sponsored by the Planning Commission, this research work is essentially a status report on the finances of states collectively and individually, with special reference to actual and targeted plan outlays as well as actual vis-à-vis planned resources to finance these outlays. It covers the current decade until the fiscal year 2008-09, and also examines the issues in a disaggregated manner, both by states and by sectors. On the basis of full coverage for Tenth Plan and partial coverage for the Eleventh, it identifies sectors and states with large shortfalls and highlights that at least for the general (non-special) category states, own source resources are the main determinant of plan performance.

The study critically assesses the key features of the financial globalisation process in India.

The objective of this study was to assess the status of human development in India against stated goals (state level/national/MDGs), estimate the costs of covering the remaining part, and suggest ways of bridging the financial resource gap including ways of devising fruitful partnerships between the government and the private sector.

The project, funded by Administrative Reform Commission, Government of India, outlines a coherent approach to expenditure management, with a view to bring about a systemic change in the process of expenditure decision making and control, both at central and state levels so that reforms in various components relating to financial management fall in place and reinforce each other within an overarching concept and philosophy. The report contains recommendations on strengthening budgetary process by taking programme-based approach with a multi-year perspective to become more performance-oriented. The report also examines the institutional aspects relating to budgetary process, financial management systems, smooth flow of funds for programmes, internal audit and control systems, external audit systems, to recommend suitable reform measures. In this context, strengthening state treasury system through use of information technology for better budgetary control in an integrated financial management framework is also emphasised.

The objective of this study was to assess the status of human development in India against stated goals (state level/national/MDGs), estimate the costs of covering the remaining part, and suggest ways of bridging the financial resource gap including ways of devising fruitful partnerships between the government and the private sector.

This study attempts to design a scheme for transfer of resources from the centre to states to enable them to provide certain minimum standards of health services. Specifically, two alternative approaches are being explored using data from 15 major states in India. The first approach involves estimation of the expenditure requirements according to the physical norms prescribed by the Ministry of Health and Family Welfare along with other policy goals. The second approach attempts to estimate an expenditure function and use it to analyse the differences in the required expenditure of the health sector across states.

The study deals with decentralisation in Sri Lanka primarily with respect to provincial councils, the second tier of government. It examines the pattern of expenditures and their financing at the provincial level, the assignment of revenue (tax) handles, and the system of intergovernmental transfers in order to provide suggestions for improving the equity and efficiency of the system. It argues for a better defined role of provincial councils in the delivery of services, a more rational and predictable system of intergovernmental transfers that constitute the primary source of funds for the provinces, and suggests alternatives to the present tax system – particularly with reference to indirect taxation – that would be more efficient. The study does not recommend borrowing powers for provinces at the present juncture owing to financial weaknesses.

As part of the work for this study, two training programmes for Sri Lankan officials including those from the provincial councils as also from the Finance Commission were conducted at the Institute during November-December, 2007.

The paper aims to assess the fiscal health of five urban agglomerations (UAs) in India viz. Delhi, Hyderabad, Kolkata, Chennai, and Pune. The main objective of the paper is twofold: First, to review the status of revenue generation and expenditure responsibilities of the constituent ULBs. Second, to assess the magnitudes of their fiscal gaps by estimating the expenditure needs and revenue capacities and give some useful recommendations to reduce these gaps. The main findings suggest that excepting five small ULBs in Hyderabad, others are not in a position to cover their expenditure needs through their present revenue collections. All UAs have unutilised potentials for revenue generation with the exception of one UA i.e, Hyderabad. All others would fail to cover their expenditure needs, even if they realise their revenue potentials. In all UAs, except Chennai, bigger corporations are more constrained than the smaller ULBs. The paper recommends better utilisation of ’own revenue’ handles of the cities, by improved administration of property taxes, implementation of other taxes, and collection of user charges.:

NIPFP, in collaboration with the American University, Washington DC and University of Kwazulu-Natal, South Africa, is part of this multi-country research team and has conducted research on gender dimension of taxation for both direct and indirect taxes in India. Gender dimension of direct tax has been analysed by detailed analysis of the direct tax codes through a gender lens, while for indirect taxes an analysis of household level tax incidence is undertaken.

This study, undertaken for the Tax Research Unit set up at NIPFP by the Department of Revenue, Ministry of Finance, focuses on the exemptions accorded to small scale units within the central excise regime. The objective of the study is to assess the impact of these exemptions on the units. The conclusion drawn first is that while there is agreement on the need for an exemption threshold, the form and level should be based on the rationale for providing the exemption, and second, the costs to the exchequer of this exemption clearly exceed the benefits derived by the intended beneficiaries, although they might fall short of the benefits derived by all beneficiaries.

The report estimates (a) tax collection from petroleum products and natural gas by the central and state governments; and (b) subsidies on individual petroleum products. Petroleum products considered in the study include motor spirit; high speed diesel; aviation turbine fuel; superior kerosene oil; liquefied petroleum gas; naphtha; bitumen; compressed natural gas; and liquefied natural gas. The study explicitly examines the tax structure and projects future revenues from taxation of petroleum products and natural gas by the central government and state governments for the year’s upto 2011-12.

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A draft memorandum for submission to the Thirteenth Finance Commission was prepared at the instance of the Government of Punjab.

The work involved assessing progress of the state government in achieving the targets under the FRBM Act in the state of Goa and preparing a medium term fiscal plan for the year 2007-08 to 2010-11.

Using actual tax receipts up to Dec. 31, 2007, the earlier projections of CT and IT receipts at the end of the FY 2007-08, and the forecast of personal income tax and corporation tax were revised and submitted to the Ministry of Finance.

The Jawaharlal Nehru National Urban Renewal Mission (JnNURM) requires cities applying for assistance to lay down a time schedule for implementing the proposed reform agenda. The reform agenda consists of reforms that (i) are to be undertaken by urban local bodies (ULBs), and (ii) those to be undertaken by the state governments. The time schedule (together with the milestones to be achieved) is incorporated in the Memorandum of Agreements (MoAs) which are signed by the state governments, ULBs, and the Ministry of Urban Development.

The Vision statement alludes that the region should usher in peace and prosperity for the region. By 2020, the region should have a per capita income which should at least be equal to the national average and poverty should be banished from the region. To achieve these goals, the document puts forth six interdependent components of the strategy namely: (empowerment of the people through participatory governance; (ii) focus on rural development through increase in agricultural productivity and creation of non-farm employment opportunities; (iii) development of sectors with comparative advantage; (iv) maximising self governance and participatory planning and diplomatic initiatives to foster trade with neighboring countries; (v) augmenting physical and social infrastructure in the region; and (vi) ensuring adequate flow of resources for infrastructure from the governments and fostering public private partnerships in infrastructure, wherever feasible.:

Fourteen years after the mandating of a third tier of government at local level by a constitutional amendment in 1993, this study reports on how decentralised government is functioning in the rural areas of four states (pre-selected by the terms of the UNDP mandate): Chhattisgarh, Madhya Pradesh, Orissa, and Rajasthan. The report quantifies the present state of functional devolution from figures of expenditure assignment using Budget Estimates of the four states for the fiscal year 2006-07; fund flows from the centre based on the central budget for fiscal year 2006-07; and the utilisation of these receipts by PRIs, along with own revenues collected and the state of fiscal monitoring, based on a field survey of 780 sample gram panchayats, 78 janpad panchayats, and 17 zilla panchayats. The seventeen districts covered comprise the initial set of nine backward districts pre-selected by UNDP and an additional eight districts with lower deprivation characteristics.:

The objective of this study was to assess the status of human development in India against stated goals (state level/national/MDGs), estimate the costs of covering the remaining part, and suggest ways of bridging the financial resource gap including ways of devising fruitful partnerships between the government and the private sector.

The primary objectives of the project were to compute expenditure needs (estimated in the case of Kolkata, but computed in the case of other cities due to lack of data), revenue capacities and come up with fiscal gaps faced by these cities in the provision of core urban services such as water supply, sewerage, sanitation, solid waste, municipal roads, and street lights for all local governments within these urban agglomerations. For estimating revenue capacities, the non-agricultural district domestic products for the districts in which the local governments were located, were used. For computing expenditure needs, standard norms on what is acceptable for expenditure on various public services were used, and gaps between desired and actual expenditure were arrived at. The difference between the actual expenditure gaps and the potential revenue capacity was computed as the fiscal gap. Six reports were submitted to the World Bank for each of the cities -- Kolkata (in June 2007), Delhi, Pune, Hyderabad (in December 2007), Chennai, in addition to a synthesis report (in February 2008).

This paper is an attempt to set up a 3-equation structural model for the Indian economy 1987-88 to 2002-03 linking three endogenous variables: GDP per capita; life expectancy at birth (LE); and CO2 (Carbon dioxide emissions) with 28 predetermined variables. To overcome the problem of degrees of freedom (undersized samples), the predetermined variables by their principal components are replaced.:

The study examined the fiscal decentralisation process through a gender lens in selected five countries; viz., Mexico, Morocco, Philippines, South Africa, and India. The study noted that if the budgetary process is to yield significant benefits for women, gender budgeting in the narrow sense of earmarking a minimum fraction of expenditure of every government department might not be very helpful. Given that most of the public services that concern women or address their needs are by and large delivered at the local level, the first requirement for gender orientation of a government budget is to empower local governments adequately to take care of these concerns, that in turn implies decentralisation in the true sense and not just as a matter of form. While all the countries surveyed have attempted to move in the direction of gender budgeting, progress in the matter of fiscal decentralisation and women’s empowerment has been uneven across countries. The message reflected through these studies is that if gender concerns are to be effectively attended through the budget process, decentralisation in the true form must be followed i.e., without any problems of unfunded mandates and with adequate feminisation of local governance and effective voice in public expenditure decisions.

The project aimed to develop a medium-term fiscal policy plan for the period from 2006-07 to 2008-09 with rolling targets for various deficits and stock of state debt. Having analysed the recent trend in Goa State Finances and after examining in detail the FRBM Act of Goa, fiscal restructuring paths with detailed prescriptive targets of revenues and expenditures to adhere to the FRBM targets had been suggested.

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As part of the annual exercise of forecasting direct tax receipts, this paper provided tax projections for CT and IT for FY 2006-07. The forecasts are based on actual tax collection upto the end of second quarter (i.e., upto September 30, 2006) and projections for the third and fourth quarters.

This paper provided revised forecasts on CT and IT for FY 2007-08. The revised forecasts are based on actual tax collection upto the end of the third quarter (i.e., upto Dec. 31, 2006) and projection for the fourth quarter.

The objectives of the study were to develop norms and standards for core civic services comprising safe drinking water, sanitation, including sewerage, road maintenance and street lights for urban areas; work out financial implications of these norms; and study the existing octroi system in the Andaman and Nicobar Islands and finally recommend specific actions for restructuring the invoice-based octroi. The average consumption of water at the time of the survey was 90 litre per capita daily (LPCD). The results of the household survey (desired 130 LPCD) broadly concur with the ideal supply standard (of 135 LPCD) proposed by the National Commission on Urbanisation for urban areas. Two scenarios for norms regarding PBMC's water supply: increase water supply by 50 LPCD; increase water supply by 100 LPCD are considered. If increases in Operations and Maintenance and establishment expenditure alone were to be financed by user charges, then the increase required in the user charge is an average increase of Rs.73 per month per household (for an extra 50 LPCD) or an increase of Rs.146 per month per household (for an extra 100 LPCD). The recommendations list five proposals for restructuring octroi. The study team found that all proposals for octroi restructuring yield greater net revenue to the PBMC than its net current revenue (for 2004-05) which was Rs.223 million.:

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Estimation of demand of petroleum products for the period upto 2025. The demand estimates have taken into consideration the substitution of liquid petroleum products by natural gas, CNG, etc. The demand projections reflect a change in the structure of product mix. Demand for high speed diesel and superior kerosene oil is likely to decrease due to high rate of substitution, while demand for aviation turbine fuel is likely to grow at a higher rate. Demand for naphtha, liquified petroleum gas, motor spirit and furnace oil is likely to follow the trend rate. The study uses multiple correlation forecasting and vector autoregression (VAR) methods for estimating the demand.

This project has developed indicators of good governance for the electricity sector that span legislative, executive, and regulatory processes. The indicators have been tested in four Asian countries: India, Indonesia, Philippines, and Thailand. The results are being disseminated to international agencies, governments, regulators and civil society. The project is in collaboration with the World Resources Institute (USA), and Prayas-Pune.:

This programme was designed to enable the GoMP to strengthen performance management in a sustainable manner for effective poverty reduction and human development. The objective of the programme design was to develop a comprehensive framework for Public Expenditure Management by devising a Medium Term Expenditure Framework (MTEF) and link it to annual budgets.

The specific objectives of the project are the following six: (i) to identify the access and utilisation patterns of microfinance programmes across gender; (ii) to analyse the structure of interest rates, loan portfolio, pattern of collateral (if any), frequency of repayment terms, any evidence of Ponzi finance across gender; (iii) to analyse whether ‘peer monitoring’ instead of tangible asset-based collateral ensure better welfare of women borrowers; (iv) to analyse the determinants of the Self Help Group formation process and their participatory management in microfinance programme in reducing the transaction costs of both banks and borrowers; (v) to analyse the feedback mechanism of microfinance and economic activity, whether microfinance is a strategic tool for income generating activities and poverty alleviation; (vi) to analyse whether access to microfinance leads to economic empowerment of women through improving the bargaining power of poor women in intrahousehold and societal decision making processes; and (vii) to analyse that the financial implications of microfinance on bank branch business as attaining financial viability and sustainability are the two institutional challenges of microfinance programmes.:

The methodology adopted is Control Group Methodology through longitudinal surveys across six banking zones of India in 12 blocks (out of which 6 are control blocks) to analyse the SGSY, the largest poverty linked microfinance programme.

The overall conclusion of the study is that any kind of subsidy targeted at the individual level must be stopped; instead the entire amount of central and state grant must be utilised for the development of human capital, viz., formation of SHG, training. This is based on the empirical evidence that subsidy seemed to be the major motivation factor for SHGs functioning under SGSY; therefore majority of SHGs have not generated economic surplus from their credit led assets. The recovery rate is barely 42 percent. The study emphasised that government machinery must take only a development role and leave credit decisions to banks. The gender lens applied to the study revealed that micro credit is not a panacea for economic underdevelopment; and it has not led to the economic and social empowerment of women in totality.

Fourteen years after the mandating of a third tier of government at local level by a constitutional amendment in 1993, this study reports on how decentralised government is functioning in the rural areas of four states (pre-selected by the terms of the UNDP mandate): Chhattisgarh, Madhya Pradesh, Orissa, and Rajasthan. The report quantifies the present state of functional devolution from figures of expenditure assignment using Budget Estimates of the four states for the fiscal year 2006-07; fund flows from the centre based on the central budget for fiscal year 2006-07; and the utilisation of these receipts by PRIs, along with own revenues collected and the state of fiscal monitoring, based on a field survey of 780 sample gram panchayats, 78 janpad panchayats, and 17 zilla panchayats. The seventeen districts covered comprise the initial set of nine backward districts pre-selected by UNDP and an additional eight districts with lower deprivation characteristics.

The objective was to examine the extent of fiscal space required to carry out a pay revision. Based on plausible assumption of salary hike across scales and group of employees, and future revenues and expenditures, the study examined the fiscal implications of salary hike. The study had also examined the impact of salary hike within MTFP framework of Karnataka Government and the question of fiscal sustainability thereon.

This research study examined the costs of providing urban infrastructure services. The marginal costs of providing water supply are estimated, using data from several cities of India. The findings suggest that the supply of every additional kilolitre of water imposes extra burden on the cities in the Rs. 2.62 to Rs. 5.05 range, as marginal operating costs. Even based on these short-run marginal cost estimates, some Indian cities such as, Jaipur and Pune, are found to be undercharging their water. As far as the other urban services are concerned, cities’ per capita expenditure on basic services such as street lights and toilets appeared to be abysmally low, let alone adequate, in any sense, to meet the demands of an increasing population. The study finds weak municipal finances still the core of the issue.

The objective of this workshop was to identify and arrive at policy recommendations to overcome various constraints to implementation of the recently enacted National Rural Employment Guarantee Act. A group consisting of academicians, policymakers and executive authorities from the central and state governments and ground level activists participated in this workshop. A report titled, Implementation Issues of National Rural Employment Guarantee Act has been subsequently submitted to the Administrative Reforms Commission.

The study examines the effectiveness of direct tax administration in India through an econometric model, taking into account the tax collections. It constructs a tax enforcement index treating enforcement as a latent variable through principal component analysis, and attempts policy recommendations for improving the efficiency and effectiveness of tax administration. The paper takes tax rates as given. It does not attempt designing the tax administration; rather focuses only on the effectiveness of tax administration.

The project intended to take into account various aspects of development in Sikkim. It successfully locates major gaps in the process and finds out the causes for such gaps. Some constructive recommendations to overcome the difficulties faced by the state to achieve its desired developmental goals are suggested. The study is based on secondary data collected from state and central government documents, followed by extensive surveys in different parts of the state.

The study conducted for the Planning Commission covering the period 1991-2003, analyses the problems and reform issues in state finances. The study provides an analysis of states’ revenue expenditure on public goods, merit goods, non-merit goods and non-goods highlighting changes taking place. The analysis brings out fluctuating nature of the tax revenues and decline in the contribution from non-tax revenues. The analysis concludes that states’ fiscal balance deteriorated sharply from mid-nineties which led to states’ aggregate debt ballooning to constitute over 300 % of its total revenues. This study also presents a comprehensive analysis of central transfers to states. The study makes a number of recommendations for achieving sustained improvement in state finances.

The NIPFP jointly coordinated this project sponsored by the Asian Development Bank as part of its technical assistance programme. Under this, selective policy oriented research under the overall theme of "State Government Budget Constraints and Social Services" was carried out by experts in their respective fields.

Prima facie, budgets appear to be gender neutral. But the budgetary policies can have differential impacts on men and women due to systemic differences in their access to public services. Gender budgeting aims at examining the expenditure allocation through a gender lens. The project critically examines the approach and methodology of sensitising financial allocations through gender budgeting initiatives in India. The analysis revealed that visible gender allocations in the recent budget — both specifically targeted programmes for women and pro-women allocations — constituted only 5 percent of the total budget; sectoral analysis revealed that higher budgetary allocations per se do not mean higher spending; there exist significant deviations in budget estimates and actual spending. Expenditure tracking surveys are required to analyse these deviations. There is also an urgent need to strengthen the system of unit cost and units utilised across gender to undertake periodic gender disaggregated benefit incidence analysis (BIA) to analyse impact of skewed gender differentials in the distributional impacts of public expenditure. Policy implications arising from the analyses are that transparency of gender sensitive budgetary allocations needs to be ensured for accountability; however, earmarking public expenditure for women is only the second best principle of gender budgeting.

This project was directed at preparing a fiscal responsibility and budget management bill for Rajasthan, embedded in a larger study of state and municipal finances, so as to enable funding of infrastructure needs of the state while at the same time preserving the fiscal correction path projected in the Bill.

Submitted to the Committee to Examine the Impact of Overall Imposts on Petroleum Crude and Natural Gas set up in the Ministry of Petroleum and Natural Gas, this study takes a comprehensive look at the taxation of upstream petroleum sector as also natural gas starting with a review of the theoretical aspects and selected empirical research. It then focuses on the taxation element in the finances of two nationalised oil companies in the context of the Indian system of taxation of this sub-sector. For reference, it compiles some information on taxation of this sector in several oil-producing nations, and discusses related issues in fiscal federalism. Finally it makes suggestions in regard to possible reforms in the system of taxation of crude petroleum and natural gas.

The report initiated at the behest of the Planning Commission takes stock of the prevailing economic and social conditions in the Andaman and Nicobar islands, and assesses the critical bottlenecks in its development. Based on detailed sectoral analysis, it recommends policy changes and institutional mechanisms for sustainable development of this ecologically sensitive region. The report makes a number of suggestions in respect of sustainable exploitation of marine products, and high value agricultural and horticulture products; strengthening social infrastructure in keeping with the requirements of the thrust areas; developing physical infrastructure including connectivity between dispersed islands in the union territory, and with mainland India and neighbouring countries; fiscal consolidation and reform; and reducing risk factors by preventing/reducing the negative impact in the event of a natural phenomenon.