Owing to higher budgeted growth of share in central taxes, West Bengal, Sikkim and Manipur would find it difficult to manage their finances in FY13, according to India Ratings & Research.

In a report on public finance, the credit rating agency, also said that Goa, Punjab and Uttarakhand would face similar plight.

“However, West Bengal’s own tax revenue in H1FY13 increased by 35 per cent (budgeted growth: 25.2 per cent) and the State collected nearly 46 per cent of its target in the first half,” the report said

West Bengal, thus, would be able to mitigate the adverse impact of slow growth of share in central taxes by its own tax collection performance, India Ratings research analysts Devendra Kumar Pant, Neha Agarwal and Shiva Subramanian said.

Talking about fiscal slippage ahead of forthcoming Budgets of the States, the report estimated that while, in aggregate, the slippage is likely to be low, States with high proportion of revenues from central transfer (mainly special category States) will be affected more than other States.

Many States had budgeted for more than 18 per cent growth in share of central taxes in their FY13 budget. “However, some of these States – Andhra Pradesh, Karnataka, Maharashtra, Rajasthan and Tamil Nadu – have relatively better fiscal profile and would be able to manage their finances,” the report added.

The liquidity condition for States has remained normal with only eight States availing ways and means advances (WMA) from RBI in FY13.

West Bengal, followed by Punjab, Jammu and Kashmir, Manipur and Nagaland availed liquidity facility for over 48 days up to January 1, 2013.

States invested their surplus cash in ATBs and ITBs. The monthly average overall investment in ITBs and ATBs by the State Governments increased to Rs 1,173 billion up to November 2012 (FY12: Rs 999 billion).


(This article was published on February 14, 2013)
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