Impact of Fiscal Responsibility Legislations on Revenue Deficit
Realizing the importance of the containment of revenue deficits and build surplus thereafter, the Central and State Governments have implemented the Fiscal Responsibility Legislations in India. This paper examines the impact of FRLs on Revenue Deficit, considering the pre and post FRL period data in the Non Special Category States in India. The statistical analysis revealed that the means of revenue deficits to Gross State Domestic Product ratios of the select Non Special Category States are reduced and majority states went in to revenue surplus during the post FRL period, compared to pre FRL period and variations of the ratios among the states are also reduced, which may indicate that the FRLs implementation had a significant impact on the elimination of revenue deficits. Hence, an effective implementation of FRLs coupled with other reforms would not only eliminate the revenue deficits, but builds adequate revenue surplus leading to economic growth and human development.