Why is it in the news?
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The Reserve Bank of India warned of the rising risks to fiscal consolidation of the states.
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The state finances are saddled with farm loan waivers, income support schemes and the Uday bonds for their power distribution companies.
More in the news
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The remarks were made during a meeting between the members of the 15th Finance Commission and the RBI.
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The RBI said the UDAY scheme, recent income support schemes of the government and farm loan waivers could drive fiscal slippage in the revised estimate for 2018-19.
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In the Interim Budget presented in February, the government announced a cash transfer scheme, for small and marginal farmers with landholdings of up to two hectare, of ₹6,000.
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The government had allocated ₹75,000 crore towards the scheme for financial year 2020.
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The RBI also stressed the “importance of states has increased” with the shift in composition of government finances.
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It also said the outstanding debt as percentage of GDP has been rising despite moderation in interest payment as percentage of revenue receipts.
Source
The Hindu.