Reserve Bank Holds 33rd Conference Of State Finance Secretaries

The 33rd Conference of the State Finance Secretaries was held in Mumbai on July 6, 2023. The conference, inaugurated by the Governor of the Reserve Bank of India (RBI), focused on the theme of ‘Debt Sustainability: States’ Perspective.’ The event was attended by Finance Secretaries from 23 states, one Union Territory, officials from the Ministry of Finance, Government of India, Controller General of Accounts, and the Comptroller and Auditor General of India.

Importance of Fiscal Consolidation:

During the conference, RBI Governor Shaktikanta Das highlighted the significance of fiscal consolidation and improving the quality of expenditure for the states. He emphasized the need for states to prioritize these areas to ensure long-term fiscal health

Debt Sustainability:

Governor Das underscored the importance of debt sustainability for the states. Recognizing that excessive debt can jeopardize the fiscal health of states, he urged them to adopt measures to manage their debts effectively.

Review of Financial Matters:

The conference reviewed several financial matters related to the states’ fiscal health. These included market borrowings by the states, administration of the Consolidated Sinking Fund and Guarantee Redemption Fund, issues pertaining to state government guarantees, and short-term financial accommodation provided by the Reserve Bank to the states.

Contingent Liabilities and Guarantees:

Governor Das also highlighted the significance of addressing contingent liabilities and guarantees in the fiscal health of states. It is crucial for states to manage and monitor these liabilities effectively to avoid any adverse impact on their finances.

Focus on Productive Capacities:

The conference reiterated the importance of allocating increased funds for sectors such as health, education, infrastructure, and green energy transition. It was suggested that states should prioritize these sectors and treat them as essential components of capital planning, rather than considering them as expendable areas during budgetary cutbacks.