Page 1 of 11
Journal for Studies in Management and Planning
Available at http://edupediapublications.org/journals/index.php/JSMaP/
ISSN: 2395-0463
Volume 03 Issue 08
July 2017
Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 306
Fiscal Status of Haryana: An Analysis
Ruchi & Preeti Dabas
1Research Scholar, Department of Economics, M.D. University Rohtak
Email – ruchi4527@gmail.com
2Student, Department of Economics,M.D. University Rohtak
Email – preetiidabas871@gmail.com
Abstract
Deficits determine the fiscal health and
financial strength of any economy or state.
This paper attempts to highlight the various
fiscal indicators of Centre and Haryana
state government and examine the
significance of expenditure and public debt
on fiscal deficit of Haryana ranging the time
period from 2004-05 to 2016-17. To fulfil
the above said objectives, secondary data
has been collected from various Statistical
Abstracts of Haryana; Department of
Economic & Statistical Analysis, Haryana;
Economic Survey of Haryana; Central
Statistics Office, India; and Trading
Economics as well. In order to satisfy the
objectives, the study used simple descriptive
tools like Least Square Growth Rate,
Coefficient of Variation (C.V.) for
estimating the instability among the data.
The study revealed a higher value of C.V.
for borrowings which indicates that
government borrows more to repay the old
debts. Increment in government borrowings
is mainly due to increase in non-plan
expenditure as well as social infrastructure;
which is not a positive sign since it
ultimately results in rise in government
fiscal deficit. Hence, need of the hour is to
reduce public expenditure, cut down the
subsidies, improve tax structure and reduce
interest payments on past debt.
Key words: Deficits, Expenditure, FRBM
Act, Trends, Growth rate.
Introduction:-
Fiscal Deficit occurs when the total
expenditure of the government over the
revenue that it generates except from the
borrowings exceeds. Government covers
expenditure through borrowings due to
shortfall in receipts; therefore, borrowings
indicate that government borrows more to
repay the old debts. Generally, fiscal deficit
takes place due to either revenue deficit or a
main hike in capital expenditure. Capital
expenditure either creates long-term asset
such as bridges, factories, roads, transports,
Page 2 of 11
Journal for Studies in Management and Planning
Available at http://edupediapublications.org/journals/index.php/JSMaP/
ISSN: 2395-0463
Volume 03 Issue 08
July 2017
Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 307
irrigation networks, health, education, water
supply and other hard infrastructure etc. Net
Fiscal Deficit can be arrived at by deducting
net domestic lending from gross fiscal
deficit (Gupta, J.R. 2011). Economist’s
views vary widely on fiscal deficit.
According to the eminent economist J.M.
Keynes, a deficit prevents an economy from
falling into recession. On the other hand,
another school of thought postulates that
fiscal deficit should be nil.
To keep a check on deficits, manage them
and to bring fiscal discipline; government
enacted an act, called Fiscal Responsibility
and Budget Management (FRBM) Act in
2003. Its chief objectives are:
to attain inter-generational equity in
fiscal management;
long-term fiscal and macro- economic stability;
better coordination between fiscal
and monetary policies; and
to lay down transparent fiscal
operations.
The FRBM rules put limits on fiscal and
revenue deficits. RBI is also given power
under FRBM Act for taking measures to
control inflation.
Haryana Profile
Haryana got the title of statehood on
November 1st, 1966. It has geographical
spread of 44,212 sq. km (1.2 per cent of
India’s total area) and a population of 27.76
million (2.09 percent of India’s total
population) with density of 573 per sq. km.
For administrative purposes the state is
divided into 6 Divisions (Ambala, Hisar,
Rohtak, Gurgaon, Karnal, and Faridabad),
22 districts, 71 sub-divisions, 93 tahsils, 49
sub-tahsils, 140 development blocks, 154
towns and 6841 inhabited villages. There are
90 Legislative Assembly seats, 10
Parliamentary seats and there is no
Legislative Council in Haryana. According
to census 2011, 65 per cent of people live in
rural area; whereas, the rest 35 per cent in
urban area. Literacy rate for Haryana is
75.55 percent and the sex ratio stands at 879,
that is, there are 879 females per 1000 males
(Statistical Abstract of Haryana 2015-16).
Haryana is one of the most progressive
states of north India. It has been an
established state in carrying out fiscal
reforms and fiscal management is
recognized as one of the best in the country.
As per the directive of the 14th Finance
Commission, the state was to achieve a 2.47
Page 3 of 11
Journal for Studies in Management and Planning
Available at http://edupediapublications.org/journals/index.php/JSMaP/
ISSN: 2395-0463
Volume 03 Issue 08
July 2017
Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 308
per cent fiscal deficit in 2016-17 against the
target was 3 per cent of GSDP which is well
within the predetermined limits (Economic
Survey of Haryana 2016-17).
Objectives of study: -
1. To highlight the trends of different
types of deficits and their
significance;
2. To examine the significance of
expenditure and public debt on fiscal
deficit.
Data and Research Methodology: -
For the analysis purpose, this paper uses
time series data from 2004-05 to 2016-17 on
the variables fiscal deficit, revenue deficit,
growth rate, expenditure and public debt of
Haryana. The year 2003 has been a pivotal
one in the history of public finance since it
was the year of enactment of FRBM Act. To
fulfil the objectives of the study secondary
data has been drawn from secondary sources
such as RBI handbook of Statistics on State
Government Finances; Department of
Economic & Statistical Analysis, Haryana,
Various Statistical Abstract of Haryana,
Economic Survey of Haryana (2016-17) and
other relevant information is gathered from
journals, internet, research papers and
newspaper reports.
Analysis of growth rates: -
Based on the availability of data, the simple
statistical tools are applied for the analysis
of the secondary data about Least Square
Growth Rate, Coefficient of Variation of
Haryana expenditure and public debt from
2004-05 to 2016-17.
Least Square Growth Rate
Formula:-
The method of least square growth rate is
used when time series data is given for a
long time series. We can’t estimate the
growth rate when half of the observations in
a series are missing. Linear regression trend
line is fitted to the logarithmic annual values
of the variable in the relevant period to
estimate the least-squares growth rate, r. The
form of the regression equation is as under:
Yt = Y0 (1+r)T...................... (1)
Where,
Yt = Current year value
Y0 = Base year value
t = time period, t=1, 2, 3, 4,.........,n.
Taking log on both sides of equation 1; we
get
Log Yt= log Y0+ tlogb
