18.8 ndian onom
(i) Loan Disbursals by the Government payment liabilities in the year also depends on the
fact as to which years in the past the governments
The loans forwarded by the government might be
had other receipts and for what duration of
internal (i.e., to the states, UTs, PSUs, FIs, etc.) or
maturity periods. As for example, the PF liabilities
external (i.e., to foreign countries, foreign banks,
were not an item of such liabilities for almost first
purchase of foreign bonds, loans to IMF and WB,
three decades after Independence. But once the
etc.).
government employees started retiring, it went
(ii) Loan Repayments by the Government on increasing. Future India (especially 1960s and
1970s) saw expansion of the PSUs and excessive
Again loan payments might be internal as well as
employment generation in them (devoid of the
external. This consists of only the capital part of
logic of labour requirement). We see the PF
the loan repayment as the element of interest on
liabilities expanding extensively throughout the
loans are shown as a part of the revenue expenditure.
1990s—the governments had been under pressure
(iii) Plan Expenditure of the Government to manage this segment either by cutting interest
This consists of all the expenditures incurred by the on PF or at present trying to make it a matter of
government to finance the planned development market economy. Same thing happened with the
of India as well as the central government financial element of pension and we have been able to devise
supports to the states for their plan requirements. a market mechanism for it once pension reforms
(iv) Capital Expenditures on Defence by the took place and the arrival of a pension regulatory
Government authority for the area.
This consists of all kinds of capital expenses to cAPitAl Deficit
maintain the defence forces, the equipment
There is no such term in public finance or in
purchased for them as well as the modernisation
economics as such. But in practice one usually
expenditures. It should be kept in mind that
hears the use of the term capital crunch, scarcity
defence is a non-plan expenditure which has capital
of capital in day-to-day economic news items.
as well as revenue expenditures in its maintenance.
Basically, the government in the news is facing
The revenue part of expenditure in the defence
the problem of managing as much funds, money,
is counted in the revenue expenditures by the
capital as is required by it for public expenditure.
government.
Such expenditure might be of revenue kind or
(v) General Services capital kind. Such difficulties have always been
with the developing economies due to their high
These also need huge capital expenditure by the level requirement of capital expenditures. Had
government—the railways, postal department, there been a term to show this situation, it would
water supply, education, rural extension, etc. naturally have been Capital Deficit.
(vi) Other Liabilities of the Government
Basically, this includes all the repayment liabilities fiscAl Deficit
of the government on the items of the Other When balance of the government’s total
Receipts. The level of liabilities depends on the receipts (i.e., revenue + capital reeipts) and total
fact as to how much such receipts were made expenditures (i.e., revenue + capital expenditures)
by the governments in the past. The amount of turns out to be negative, it shows the situation of