Alarmed at the further worsening of financial situation of states, the Economic Survey on Thursday stressed on drastic reforms and implementation of the Debt Swap Scheme to reduce their fiscal deficits from the present 4.6 per cent of GDP.
"The deterioration in state finances is more pronounced. Fiscal deficits of state governments increased from 3.3 per cent of GDP in 1990-91 to 4.6 per cent in 2001-02," the pre-Budget Survey tabled in Parliament said.
The revenue deficit of states nearly trebled from 0.9 per cent of GDP in 1990-91 to 2.6 per cent in 2001-02 although revenue from their own taxes increased marginally to 5.8 per cent of GDP last fiscal from 5.3 per cent in 1990-91.
The Survey noted that fiscal deficit is slated to come down to 4.2 per cent of GDP this fiscal with revenue deficit coming down to 2.0 per cent from 2.6 per cent in 2001-02 after implementation of reforms.
State level fiscal reforms have been initiated in Karnataka, Maharashtra, Punjab and Kerala through fiscal responsibility bills, it said.
The survey said Andhra Pradesh, Delhi, Haryana, Karnataka, Madhya Pradesh, Orissa, Rajasthan, Uttar Pradesh and Uttaranchal have enacted State Electricity Reforms Acts, which envisage corporatising state electricity boards and setting up state electricity regulatory commissions.
So far, 22 states have signed the tripartite treaty for one-time settlement of outstanding dues of SEBs to the PSU power companies.
Moreover, Andhra Pradesh, Karnataka, Maharashtra, Madhya Pradesh, Uttar Pradesh and West Bengal have enacted legislations making stringent penal provision for theft of electricity, the survey said.
To address the growing debt burden, the survey said a Debt Swap Scheme has been formulated for liquidating high cost loans given by centre to states.