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States are inflating their capital expenditure promises and fiscal…
States are inflating their capital expenditure promises and fiscal projections but consistently falling short in actual spending, exposing gaps in fiscal discipline and unrealistic economic assumptions.
There is a significant deviation between budgeted fiscal deficit targets and actual performance, leading to unreliable fiscal forecasts.
Evidence 2
Bihar’s budgeted fiscal deficit was 3.5% of GSDP, but the RE for 2022-23 estimated it to be 8.8%
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Evidence 3
Bihar's RE for 2021-22 projected an 11.4% fiscal deficit, while the actuals were much closer to the budget estimate at around 3.3%-3.8%
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Evidence 1
Assam’s fiscal deficit target for 2022-23 was 3.2% of GSDP, but the Revised Estimate pushed it to 8.1%, revealing a large discrepancy
LOGIC
The considerable differences between budgeted and actual fiscal deficits point to fiscal mismanagement or unforeseen economic circumstances that impair state planning. When revised estimates (RE) and budget estimates (BE) diverge significantly, it indicates a lack of clarity or foresight in budgetary planning. This budget shortfall indicates a lack of fiscal discipline and performance.
Evidence 4
Seven states, including Andhra Pradesh and Punjab, projected fiscal deficits higher than the 3.5% GSDP limit recommended by the Fifteenth Finance Commission
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CONNECTION
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The main argument is based on the idea that significant departures from the goal fiscal deficit and underspending on capital expenditures are signs of more serious problems with governmental fiscal management. All of the sub-claims together indicate that the states' actual performance and their promised budgetary discipline are out of sync. These two mistakes, underspending on capital expenditures and budgetary miscalculations, show that the states' finances are weaker than anticipated, which undermines the credibility of their budgets. The overall narrative that states are overpromising but underdelivering in terms of capital expenditure and fiscal restraint is created by this synergy.
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