The 11th Finance Commission has recommended hike in states' share in Central tax revenue to 33.5 per cent from 29 at present. The Central Government shall have to give an additional Rs.8,000 crore to Rs.10,000 crore every year. Can the government bear the additional liability ?

Every good government is expected to meet its non-plan expenses, namely interest payment, defence, pay, pension, subsidies, grants and miscellaneous liabilities from revenue income and spend on capital or development works, if there is any surplus.

The net revenue income of the Centre is estimated at Rs.2,03,673 crore and non-plan expenditure at Rs.2,28,768 for the year 2000-2001 And Rs.25,070 crore will be spent from new borrowed funds to meet day to day expenses of government. The entire plan expenditure is from borrowed funds.

Out of the revenue expenditure of Rs.2,28,768 crores, liability of interest payment is estimated at Rs.1,01,266 crores and pay and pension liability is Rs.34,000 crore and Rs.15,000 crore respectively for the year 2000-2001. The Government is to borrow Rs.1,17,000 crore during year 2000-2001.

The total debt of the Central government which was Rs.3,14,558 crore in year 1990-91 is estimated at Rs.10,98,178 crore for year 2000-2001 and fiscal deficit is 11% of the GDP.

The new managing director of IMF Harst Kohler has rightly warned the Central Government that "the Central and state finances will have to be consolidated as otherwise India could face much more difficult problems."

VASANT J. DESAI
AHMEDABAD.

DATE : 16/07/2000.
TIMES OF INDIA.