Measurement issues in comparing fiscal performance of states
Abstract
Interstate comparison of fiscal performance requires the use of appropriate concepts and proper
measurement of state income, fiscal deficit and debt. GSDP at market prices and a comprehensive
concept of debt consistent with the fiscal deficit of a state government are the right concepts to use
for the purpose. Neither the rating agencies nor the finance commissions have used the right
concepts so far. Illustrative estimates for Gujarat show that this can lead to misleading target setting
and wrong perceptions about the fiscal performance of the states.
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