New Delhi, Jan 01: Worsening fiscal situation with a staggering Rs 5,80,000 crore debt burden of states during 2002 has put a question mark on meeting the tenth plan growth target of 8.0 per cent unless they accelerate the pace of reforms in new year.

But the states arriving at a consensus on introducing value-added tax from April 2003 amid the move to allow them to share revenue from service tax beamed some rays of hope in the new year to salvage the fiscal woes.
The union, for the first time in 2002, set aside all bitterness in centre-state relationship and agreed to shoulder the responsibility of reducing the financial burden of states, which were reeling under severe fiscal strain with the aggregate fiscal deficit mounting to over 4.0 per cent of GDP following implementation of fifth pay commission, narrowing down of revenue stream and high interest burden.
Some were spending almost the entire revenue on salaries, pension and interest leaving nothing for development.
Despite efforts by states, the much-touted second generation reform envisaged by centre was in jeopardy as it involved radical changes at the state-level.



Most of the Chief Ministers did not hesitate to raise doubts on Prime Minister Atal Bihari Vajpayee's 8.0 per cent growth projection during tenth plan at national development council meeting. They blamed centre's policies for high fiscal deficit and lack of resources for development.


Bureau Report