Playing A Mean Flute

Karnataka is the only state that's trying to cap fiscal profligacy. As a first, the Fiscal Responsibility Act was enacted this year to bring fiscal deficit to three per cent of gsdp by 2005-2006 and revenue deficit to zero. In another first, Ceiling on Government Guarantee Act, the limit is Rs 1,565 crore for 2002-03.

From a revenue surplus of Rs 159 crore in 1995-96, the state slipped to a deficit of Rs 2,325 crore in '99-2000. But chief minister S.M. Krishna, who also holds the finance portfolio, is implementing a medium term fiscal plan to get it back on track. Says Chiranjeev Singh, principal secretary, finance: "A number of states have asked us to help them implement similar reforms."

A new recruitment policy has helped to cut salary outgo while eight psus are to be closed down. The government has made it compulsory for all organisations to procure goods and services on a competitive basis under its Transparency in Procurement Act. Power reforms are progressing apace. As for World Bank loans, Singh says the government is keeping external debt within limits. "We cannot mortgage the future of coming generations, so the government is serious about prudent management of finances through these reforms," he said.