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CII launches Fiscal Performance Index to gauge government budgets

CII launches Fiscal Performance Index to gauge government budgets

The Confederation of Indian Industry (CII) works to maintain the environment propitious for the development of India.

 

CII is an industry-managed organization, which works with the non-profit objective. It plays a  dynamic role In the development process of India. Incorporated in 1895, it consists of  9000 members inclusive of SMEs and MNCs from private and public sectors. Furthermore, there are 276 national and sectoral industry bodies with over 30,00,000 enterprises.

 

CII chart fluctuates by working with government policies, enhancing efficiency as interfacing with thought leaders, business opportunities. Moreover, it gives a platform for networking on key issues and consensus-building.

 

Industry body came with ‘Fiscal Performance Index’ on 5th June 2019 which will help in assessing the budget quality of Centre and State government.

 

CII has developed a composite Fiscal Performance Index (FPI) that will be used in examining the quality of the budget at the state and central levels as it provides many indicators.

 

The index was constructed by contriving UNDP’s Human Development for the holistic assessment of the quality of the government budget. The composite index comprises of six components.

 

Six components

 

1. Quality of revenue expenditure:

It is measured with the help of revenue expenditure excluding the subsidies, interest payments, pension and defence in GDP.

 

2. Quality of capital expenditure:

It is measured by share capital expenditure in gross domestic product.

 

3. Quality of revenue:

It is calculated as the ratio of net tax revenue to gross domestic product.

 

4. Degree of fiscal prudence I:

There is a fiscal deficit to Gross domestic product.

 

5. Degree of fiscal prudence II:

There is a revenue deficit to Gross domestic products.

 

6. Debt index:

It guarantees to Gross domestic product and change in debt.

 

The new index reports disclosed that for the improvement of economic growth expenditure on infrastructure, healthcare, education are beneficial.

 

Budget management and Fiscal responsibility set target for the government, which does not only focus on the single component it furthermore reduces the fiscal deficits.

 

The quality of the budget could not be measured with a single ‘fiscal deficit to GDP ratio’. Therefore the government should use multiple indicators at state and Central levels.

 

Index CII helped in analyzing the state and central budget of 2004-05 to 2016-17. There was a deficit between FY13 and FY18 even after the improvements. The only improvement was done in FY16 and FY17, excluding this financial year’s overall budget has remained steady due to the alleviation of tax revenue indices, net tax and capital, revenue expenditure.

 

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