Ability of States to Implement Planned Budget in India: An Assessment Using PEFA Framework

Abstract

A credible budget complies with budget contracts voted in Parliament and improves the efficiency of government expenditure. Deviations, as a result of weak capacity to forecast revenue or execute the planned activities, pose risks to both existing and future programme management. This budgetary tenet assumes significance as the states have to respond to disruption in revenues, rising expenditure burdens and changes in priorities in the wake of COVID-19 pandemic and face challenges to restore fiscal consolidation process. The article assesses the budget credibility of states in India from 2012–13 to 2018–19 following the international standard given by the Public Expenditure and Financial Accountability (PEFA) framework. It also focuses on strengthening institutional framework to utilise fiscal instruments optimally for better service delivery and development. JEL Codes: H61, H68, E62