Bihar, a state in eastern India, faces unique challenges in managing its finances and budget. While it has made significant strides in recent years, improving its fiscal health and budgetary processes remains crucial for sustainable development. This article delves into the complexities of state finance and budgetary management in Bihar, examining its key aspects, challenges, and recent reforms.
Key Dimensions of Bihar's State Finance
Revenue Sources: Bihar's revenue streams primarily comprise state's own tax and non-tax revenues, central government transfers (including grants and share in central taxes), and borrowings. The state has been focusing on enhancing its own tax collection efficiency, particularly in areas like GST, sales tax, and excise duty.
Expenditure Patterns: A significant portion of Bihar's expenditure is dedicated to social sector development, including education, health, and social welfare programs. Other major expenditure heads include infrastructure development (roads, irrigation, power), agriculture, and rural development. Notably, the state's committed expenditure on salaries, pensions, and interest payments constitutes a considerable portion of its revenue receipts.
Fiscal Health: Bihar's fiscal health has seen improvement in recent years, with a decline in fiscal deficit as a percentage of GSDP. However, challenges persist in maintaining fiscal discipline and ensuring sustainable debt levels. The state has been actively working towards improving its revenue generation capacity and optimizing expenditure management to achieve fiscal sustainability.
Budgetary Processes: Bihar's budgetary process involves the preparation, presentation, and approval of the annual budget by the state legislature. The budget outlines the state's estimated revenues and expenditures for the fiscal year. The state government has been taking steps to enhance transparency and accountability in its budgetary processes, including increased public participation and the adoption of modern budgeting techniques.
Challenges in Bihar's Fiscal Management
Low per capita income: Bihar's relatively low per capita income compared to the national average limits its tax base and revenue-raising capacity.
High dependence on central transfers: The state heavily relies on central government transfers, making its finances vulnerable to fluctuations in central allocations.
Development deficit: Addressing the state's significant development deficit in infrastructure, education, and health requires substantial investments, straining its financial resources.
Improving tax administration: Enhancing tax compliance and plugging revenue leakages remain ongoing challenges for the state's tax administration.
Efficient expenditure management: Ensuring efficient and effective utilization of public funds, minimizing leakages and corruption, and prioritizing key development needs are crucial for Bihar's fiscal health.
Recent Reforms and Initiatives
Fiscal Responsibility and Budget Management (FRBM) Act: Bihar has enacted its own FRBM Act, setting targets for fiscal deficit reduction and debt sustainability.
Public Financial Management System (PFMS): The state has implemented PFMS to improve budget execution, tracking, and monitoring of fund flow.
e-Governance initiatives: Various e-governance initiatives have been introduced to enhance transparency and efficiency in public service delivery and financial management.
Focus on capital expenditure: The state has been increasing its capital expenditure allocation for infrastructure development, aiming to boost economic growth and create employment opportunities.
Outcome-based budgeting: Bihar has been gradually shifting towards outcome-based budgeting, focusing on achieving specific development outcomes through its budgetary allocations.
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