IGI Logo

NITI Aayog CEO B V R Subrahmanyam has emphasised on the need to focus on transparency with regard to states' finances as greater transparency will help states raise resources from market at competitive rates. He also made a case for having a fiscal council like institution to better manage the debt trajectory of the Centre and states.

He said transparency is more important than uniformity and states should ensure that everything gets reported in some form or the other because the market values transparency. Citing an example, he said, five southern states accounted for 93 per cent of off- budget borrowing last year while all the high deficit states like West Bengal, Punjab and Rajasthan have low off-budget borrowing. He mentioned ‘It is all because of market discipline...people are more willing to lend to these five states as compared to West Bengal, Punjab and Rajasthan.’ 

He added there are takers of papers issued by Tamil Nadu or Karnataka but no one for West Bengal or Punjab. Moreover, he said ‘If you don't have a developed bond market, you (states) go through this government of India, RBI route for raising resources. If you have developed bond markets, and you have transparency, I think market disciplines will operate and as I said they're probably operating in Rajasthan Punjab for investment’. Besides, he said that the Centre also needs to further improve transparency with regard to Extra Budgetary Resources (EBR) and bring in discipline for cesses and surcharges.