RBI sets up efficiency fund to reward states

A Reserve Bank study, conducted to improve the quality of public expenditure to obtain better outputs, has named the fund as Quality Control Fund, which could be kept aside to reward states for their performance on expenditure adequacy, effectiveness and efficiency, an RBI press release said.

The study, entitled Introducing Expenditure Quality in Governmental Transfers: A triple-E framework, has urged to tie the funds that states receive from this incentive fund to spending on education and health.

Another study—An outline of Post 2009 FRBM Fiscal Architecture of the Union Government in the Medium Term, has emphasised the need for reconciling the discrepancies between the fiscal deficit and movement in debt.

The study has attributed the discrepancies to the exclusion of off-budget liablities and MSS scheme in fiscal deficit while being part of outstanding liabilities amongst other factors.

Both studies have been undertaken under the aegis of the Development Research Group of the Reserve Bank along with experts in the related areas, RBI said.