Recent projections indicate that the next ten years will see a surge in the Indian gig economy. Talk about the problems that gig workers in India face and the policies that need to be implemented to solve them in this ...
Model Answer Challenges in Improving Fiscal Health of States in India Despite several initiatives to improve the fiscal health of states in India, challenges remain that require focused attention and reform. Below are the key issues: 1. High Fiscal Deficit and Debt Levels India's states faced a signRead more
Model Answer
Challenges in Improving Fiscal Health of States in India
Despite several initiatives to improve the fiscal health of states in India, challenges remain that require focused attention and reform. Below are the key issues:
1. High Fiscal Deficit and Debt Levels
India’s states faced a significant fiscal burden in recent years. In 2020-21, the gross fiscal deficit (GFD) was 4.1% of GDP, and the debt-to-GDP ratio stood at 31.1%, both exceeding the targets set by the Fiscal Responsibility and Budget Management (FRBM) review committee. Although measures like the Special Assistance Scheme (₹1,00,000 crore interest-free loans) and reform-linked borrowing limits have helped, the GFD is still projected to be 3.4% in 2022-23, which remains higher than the FRBM target of 3%. Similarly, debt levels are expected to ease slightly to 29.5% but remain above the recommended 20% (Source: Government of India Budget Documents).
2. Rising Share of Cess and Surcharge
The increase in the Centre’s reliance on cess and surcharges has reduced the share of tax revenues devolved to states. These non-shareable taxes have grown from 8% of total revenue in 2011-12 to nearly 28% in 2021-22, severely affecting state budgets (Source: Ministry of Finance, Government of India).
3. Dominance of Committed Expenditures
A substantial portion of state budgets is consumed by committed expenditures, such as salaries, pensions, and interest payments. In 2022-23, states allocated about 54% of their revenue receipts to these non-discretionary costs, leaving less room for developmental spending (Source: Reserve Bank of India).
4. Low Own Revenue Generation
Many states continue to struggle with low own revenue due to inefficient state-owned enterprises, weak distribution companies (discoms), and poor tax administration. This is exacerbated by challenges in improving tax compliance and forecasting revenue accurately (Source: NITI Aayog Reports).
5. Populist Schemes and Fiscal Stress
Programs like farm loan waivers and old pension schemes, which have been implemented by some state governments, add to the fiscal strain. While politically popular, these schemes result in long-term fiscal obligations that hinder fiscal consolidation (Source: Indian Economic Survey).
Conclusion
To enhance fiscal health, states must focus on improving revenue generation, reducing fiscal deficits, and ensuring that populist measures do not undermine fiscal discipline. Debt consolidation and fostering private sector investment should be prioritized for sustainable fiscal management.
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A NITI Aayog report estimates that more than 7.5 million workers were engaged in the gig economy in 2020-21 in India. This could grow to 23.5 million workers by 2029-30, making up for 4.1% of total livelihood in India. The Gig Economy holds a great significance in India, as it provides advantages liRead more
A NITI Aayog report estimates that more than 7.5 million workers were engaged in the gig economy in 2020-21 in India. This could grow to 23.5 million workers by 2029-30, making up for 4.1% of total livelihood in India. The Gig Economy holds a great significance in India, as it provides advantages like democratization of jobs, enhancing social inclusion, cost-effectiveness, enhancing income etc. However, as gig economy is growing rapidly, gig workers face many challenges as follows:
Faced with the above challenges, following policy measures for gig workers are needed:
Providing social security for the rising gig economy workers is the need of the hour. Many such steps are being taken in this direction like RAISE Framework for operationalizing the Code on Social Security (CoSS), 2020 and Centre & States have been asked to adopt a five-pronged approach to ensure realisation of full access to social security for all gig and platform workers when they draw up rules and regulations under the code.
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