Central Loans and Economic Development of Bihar during Plan Period

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The present book has been divided into six chapters interconnected with its theme. Chapter One highlights the backwardness of Bihar in terms of various indices and discusses the constitutional provisions of resources and functions between the center and the state. The principles of federal finance have been discussed in light of market-friendly and environmental development. Chapter two discusses the role of transferred resources with their sources and forms i.e. Finance Commission, Planning Commission of India, and Central Ministries. Chapter three examines the role of public debt in economic development, the constitutional provisions of state borrowing, its various sources, and the background of central loans in the states with special reference to Bihar. Chapter four discusses the magnitude, direction, and impact of central loans in Bihar, outstanding liabilities, and comparative analysis concerning other states. Chapter Five deals with debt management with particular reference to the central loan in terms of its magnitude, and ratio to revenue expenditure of Bihar. The last chapter contains the summary, conclusion, and suggestions on Central loans in Bihar. The book is based on certain postulates being inelastic resources and elastic functions of states necessitating the resource transfer to the states to remove regional imbalances.

Dr. Awadhesh Kumar Mishra, M.A. (Econ), Ph.D. (Born on 2nd January 1961) is Assistant Professor in the Department of Economics, SNSRKS College, Saharsa, a constituent unit of BN Mandal University, Madhepura (Bihar). He initially joined as a Lecturer after obtaining his M.A. degree from Patna University in 1984. He did his Ph.D. in 1998 from Magadh University. He is a popular teacher of economics both at the undergraduate and postgraduate levels of the university. He has contributed to several research papers published in reputed national journals. He keeps himself actively associated with research and teaching activities.

The book on "Central Loan and Economic Development of Bihar during Plan Period" deals mainly with the different aspects of the central loan in Bihar. The division of resources between the centre and the states is in favour of the centre necessitating the transfer of the resources to the states from the center. Central loan form is one of the involving the inverse flow of resources to the center in the form of repayment and interest payment. Tax-Sharing and grants from the centre to the states have no such reverse flow. Central loan provides resources to the states for both plan and non-plan purposes. It is given out of the Consolidated Fund of India. Small savings collection loans to states were a part of it prior to 1-4- 1999. With the setting up of National Small Savings Fund and linking with the Public Account of India, it was excluded from the central loan. Previously central assistance was provided for state plans, central plan sector and centrally sponsored schemes. From the 11th FYP, it is available in central loan for state plan only. The latter two are excluded on the same plea of linking them to the Public Account of India. The magnitude of central loans has decreased abundantly. The market borrowing has taken its place. The recommendation regarding debt relief by the Finance Commission XII has also reduced it. The stress on fiscal performance linked debt relief and the enactment of Fiscal Responsibility and Budget Management Act 2006 of Bihar have also contributed to the recent phenomena. Now the debt service obligation is the main problem relating to it. Bihar has to lessen its dependence on the center by improving its own resources considerably.

The present book has been divided in six chapters interconnected with its theme. The multi-facet of Central loan of Bihar has been examined. Chapter one highlights backwardness of Bihar in terms of various indices i.e. Demographic, Human Development Index like Education Index, Health Index and Income Index, Gender related Development Index, Infrastructure Index and Poverty situations, etc., necessitating the massive dose of investment. It discusses the constitutional provisions of resources and functions between the centre and the state.