CHAPTER 5 Growth and Pattern of Revenue of the Central Government

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1 CHAPTER 5 Growth and Pattern of Revenue of the Central Government In order to perform it s functions-social, economic and general-government needs funds which have to be garnered from a variety of sources (Sharma, 2001). These can be collected from the public in the form of taxes and non-taxes. In addition to these, the government can collect commercial revenue. It also collects certain charges for special services to the individuals, such as for grant of patents or for recording titles and documents. The other sources of public revenue are receipts from public enterprises run on competitive lines, receipts from special assessments, receipts from voluntary public loans. Before discussing about the classification of revenue of the central government, it is important to note that many fiscal experts think of taxation as the sole source of public revenue. The Cameralists writing in the seventeenth and eighteenth centuries regarded, taxation as the last and least of the sources of public revenue (Lutz, 36). Likewise, Taylor (48) regarded taxation as the primary source of revenue in all economies. But Groves (64) believes that there are several other government sources of revenue which have been, at certain times and places, very important. According to him, Taxes are by no means the only source of public revenue. Others include income from 112

2 the public domain and public enterprises, fees, fines and special assessments. Classification of Receipts of the Central Government The first attempt, in India, to classify the transactions was made in and the budget presented for the year was wholly based on this classification. This proposal classified the income and expenditure of the government into the revenue account and capital account. In this chapter, the revenue part is explored, and the receipts on revenue account include revenue received in the form of tax and non-tax revenue. On the other hand, receipts on capital account is composed of loans from the market, aid received from external sources, small savings, state and public provident funds, special deposits of nongovernment provident funds, and special securities. Thus, the revenue receipts of the governments - centre and states are part of revenue account and capital receipts are part of capital account. All those receipts which are non-redeemable may be termed as revenue receipts. These include revenue from taxes and from non-tax sources of revenue such as income from public undertakings like post and telegraph, railways, etc. While those receipts of the government which create liability or reduce financial assets may be called capital receipts. These include market borrowings, external assistance, recoveries of loans, small savings, provident 113

3 funds, special deposits of non-government provident funds, special securities and others. Table 5.1 shows the amount of total receipts, revenue receipts and capital receipts of the central government. Graph 5.1 exhibits that total receipts, revenue receipts and capital receipts of the central government of India are showing an increasing trend. Table 5.2 shows that during to , the total receipts as well as revenue and capital receipts of the central government increased at the rate of 14 per cent per annum. Total receipts of the central government have been continuously increasing since except for the years 79-80, 97-98, and The deterioration in was due to the decline in interest receipts, shortfall in recoveries of loans and advances and lower receipts under external assistance than originally anticipated (Economic Survey, 79-80). Significant measures were taken by the government to augment revenue such as reduction of maximum marginal rate of personal income tax on the recommendation of the Direct Taxes Enquiry Committee, 71 (Economic Survey, 80-81), reduction of highest wealth tax rate (Economic Survey, 85-86). In view of the guidelines of Long Term Fiscal Policy (LTFP), significant reforms were also carried out in the area of corporate taxation which aimed at increasing the generation of internal resources such as introduction of New Investment Deposit Account Scheme, discontinuance of surcharge on corporate tax (Economic 114

4 Table 5.1: Total Receipts of the Central Government of India Year (per cent) Revenue Receipts* (Rs. crore) (per cent) Capital Receipts** (Rs. crore) (per cent) Total Receipts (Rs. crore) (R.E.) * Excludes self-balancing item and states share in central taxes. ** Excludes states share against small savings collections from onwards. Source: Computed on the basis of the data compiled from various issues of Indian Public Finance Statistics. 115

5 Survey, 86-87). Consequently, there was a rapid increase in the total receipts of the central government i.e., from Rs crore in to Rs crore in recorded the growth of 16 per cent per annum during the period of fifteen years up to 90. Total receipts of the central government increased from Rs crore in and to Rs crore in It was due to the reforms undertaken by the central government in the tax system which included introduction of presumptive tax (lump-sum) for small traders, retailers and small road transport, strengthening of the incentive structure for savings in the form of financial asset, raising of the initial exemption limit for levy of income tax, reduction of import duties, switchover from specific to uniform ad valorem rates, introduction of service tax (Economic Survey, 95-96). Further, there was reduction in the total receipts of the central government in to Rs crore. Most important factor of this deterioration was major shortfalls in tax collections and disinvestment receipts (Economic Survey, 97-98). Total receipts further showed an increasing trend and reached to the line of Rs crore in registering the growth of 12 per cent per annum in the post-reform period. It was Rs crore in (R.E.). Along with the increase in total receipts of the central government, the revenue receipts of the central government have also witnessed a sharp rise. Such receipts stepped up 116

6 Graph 5.1: Trends in Revenue, Capital and Total Receipts of the Central Government of India Rs. crore Pre-reform period Post-reform period Revenue Receipts Capital Receipts Total Receipts Source: Computed on the basis of data compiled from various issues of Indian Public Finance Statistics. from Rs crore in to Rs crore in showing the growth of 15 per cent per annum during pre-reform period. It constituted per cent in of the total receipts of the central government (as shown in Graph 5.2). This percentage rose to 77.6 per cent in This was mainly due to increase in taxes on income, interest receipts and receipts from general services (Report on Currency and Finance, 77-78). The government undertook various policy initiatives to raise revenue which included an overhaul of the excise tax structure through the introduction of Modified Value Added Tax (MODVAT), the launching of a simpler and more growth-oriented scheme of excise duty concessions for small 117

7 scale units, simplification and rationalizations of taxation provisions relating to gifts and capital gains, and systematic steps to curb tax evasion (Economic Survey, 86-87). Despite these fiscal policy initiatives taken by the Table 5.2: Compound Growth Rates of Receipts of the Central Government of India and its Components (per cent) Year to to to to Total Receipts (i) Revenue Receipts (ii) Capital Receipts Note: As in Table 4.2. Source: Computed on the basis of data compiled from various issues of Indian Public Finance Statistics. government, the share of revenue receipts declined and reached to the level of per cent in The fiscal situation had assumed a crisis by the beginning of the fiscal year To cope with the situation the government aimed at augmenting revenue and a number of measures targeting tax revenue were announced in These included the announcement of the Voluntary Deposits Scheme, reduction of rate of tax on dividend income received from such investment, extension of the scheme of tax deduction at source, limiting the ad-valorem rates of custom duty, rationalization of 118

8 auxiliary duties, and raising of special excise duty (Economic Survey, 91-92). As a result of which there was substantial increase in revenue receipts of the central government. These receipts stepped up to Rs crore in from Rs crore in But the proposals in the budget relating to reforms of excise and customs duties were revenue-negative as the share of revenue receipts declined in total receipts of the central government. The share of revenue receipts was per cent in which improved to per cent and per cent in the next two years as an immediate result of tax reforms but declined to per cent in Again as a result of large number of reforms in this front, it rose to per cent in Thereafter, reduction in personal and corporate tax rates have brought Graph 5.2: Share of Revenue and Capital Receipts in Total Receipts of the Central Government of India As per cent of Total Pre-reform period Post-reform period Revenue Receipts Capital Receipts Source: Computed on the basis of data compiled from various issues of Indian Public Finance Statistics. 1

9 a substantial increase in the share of revenue receipts in which reached to the highest level of per cent of total receipts of the centre during the study period. A number of remedial measures were further undertaken in the regime of taxation which included reduction in the peak rates of custom duties, rectifying anomalies like inverted duty structure, rationalizing excise duties with a movement towards a median CENVAT rate and relying on voluntary tax compliance through tax payer. All these steps or we can say these tax reforms taken by the central government could not help to maintain such a higher share of revenue receipts of the central government. Since 98-99, it has been fluctuating between 60 to 80 per cent. Further, capital receipts of the central government increased from Rs crore in to Rs crore in mainly on account of larger market borrowings, state and public provident funds and receipts under the Special Bearer Bonds Scheme (Economic Survey, 81-82). It further moved up to Rs crore in which consisted of per cent of the total receipts of the central government in the year This percentage rose to per cent in and further declined to per cent in During post-reform period, it increased from Rs crore in to Rs crore in The sharp decline in capital receipts to Rs crore in was mainly on account of the discontinuance of the debt swap 120

10 scheme (Economic Survey, ). It shows the growth of 10 per cent per annum. Looking at capital receipts as a proportion of total receipts of the central government, the share of capital receipts showed a fluctuating trend. It was per cent in and declined during next two years but again was as much as per cent in A sharp decline in the share of capital receipts to 5.54 per cent in was due to decline in state provident funds, special securities and miscellaneous capital receipts. It rose to the level of per cent in but declined to.47 per cent in of total receipts. Conclusively, the revenue receipts as well as capital receipts of the central government have registered a similar trend of increase (14 per cent per annum) throughout the study period. Revenue receipts recorded lower growth (15 per cent per annum) as compared to the capital receipts during the fifteen years up to (20 per cent per annum). But the rate of growth of revenue receipts (13 per cent per annum) was higher than the rate of growth of capital receipts in the post-reform period (10 per cent per annum). So lot needs to be done to reduce the burden of borrowings and improve the quality of capital receipts. After analyzing the relative shares of revenue and capital receipts in total receipts of the central government, it is important to analyze total receipts and receipts on both accounts of the central government as per cent of GDP. 121

11 Table 5.3 exhibits total receipts of the central government as per cent of GDP. As a proportion of GDP, total receipts of the central government, comprising of revenue and capital receipts, had risen from 11.9 per cent in to per cent in due to large number of reforms to raise revenues. Despite numerous measures initiated by the government, there was a disquieting picture of shortfalls in revenue. Even during the post-reform period, it has shown a declining trend and reached to per cent of GDP in from per cent of GDP in Revenue receipts as per cent of GDP were 9.31 per cent in 75-76, which could be increased to per cent only (by 1.37 percentage points) in (as shown in Graph 5.3). Reduction in the number of slabs of personal income tax (Economic Survey, 85-86), introduction of MODVAT (Economic Survey, 86-87), rationalization of customs and excise duties (Economic Survey, 87-88) and enactment of Direct Tax Laws Bill (Economic Survey, 89-90) were the major measures undertaken by the government. No doubt, the main objective of the measures was to simplify the tax structure, establish a regime of reasonable tax rates combined with better administration to raise revenue. Revenue receipts as per cent of GDP had not grown significantly. During the post-reform period too, no improvement has been seen as revenue receipts as per cent of GDP has gone down from per cent in to 122

12 Table 5.3: Total Receipts of the Central Government of India as per cent of GDP Year Revenue Receipts Capital Receipts Total Receipts (R.E.) Source: Computed on the basis of the data compiled from various issues of Indian Public Finance Statistics. 123

13 8.85 per cent in It may be noted here that the result of the introduction of and additional refinements to MODVAT has resulted in reduction in the revenue receipts of the central government. Further, this ratio stepped up and reached at 9.72 per cent in This growth was due to the revenue led strategy of the government for achieving the targets set under the FRBM Act, 2003 and the rules made there under (Economic Survey, ). Thereafter, a slight improvement in the revenue receipts GDP ratio owes to the macro-economic policy frame in which facilitated the implementation of some of the Graph 5.3: Revenue, Capital and Total Receipts of the Central Government of India as per cent of GDP As per cent of GDP Pre-reform period Post-reform period Revenue Receipts Capital Receipts Total Receipts Source: Computed on the basis of data compiled from various issues of Indian Public Finance Statistics. key points in the fiscal reform agenda included those articulated in the Kelkar Task Force Reports on direct and indirect taxes (Economic Survey, ). 124

14 Capital receipts of the central government have shown fluctuations during to (R.E.). It was 3.16 per cent of GDP in 75-76, to 5.44 per cent of GDP in and reached to 6.21 per cent of GDP in During 90s, it dipped to 0.46 per cent of GDP in from 6.06 per cent of GDP in due to decline in state provident funds, special securities and miscellaneous capital receipts. Further, it went up to the level of 5.13 per cent of GDP in It may thus be concluded that the position regarding the share of revenue receipts as per cent of GDP has remained almost same in the pre as well as post-reform period. Composition of Revenue Receipts Revenue receipts are classified under two heads: tax revenue and non-tax revenue. Tax revenue has always occupied a dominant place in the revenue receipts of the government. It accrues to the government through a variety of taxes imposed by it like corporation tax, income tax, custom duties and excise duties. The total collection of some of these taxes is shared with the states by the central government. The principal components of non-tax revenue are net contributions of public sector undertakings, interest receipts, fiscal services, general services, social and community services, economic services and external grants. 125

15 Looking at the share of tax revenue and non-tax revenue of the centre, it is found that the main source of revenue of the central government is tax revenue which remained 70 to 80 per cent of the total revenue receipts throughout the study period (Graph 5.4). This is mainly due to indirect taxes which occupy a dominant place in central finances. The table clearly shows that there has been a rapid increase in the tax revenue of the central government from Rs crore in to Rs crore in which recorded the growth of 15 per cent during pre-reform period (Table 5.4 and Table 5.5). Firstly, it was due to higher collections from union excise duties, custom duty and corporation tax (Economic Survey, 83-84; Report on Currency and Finance, 84-85). Secondly, it was due to improvement in the share of direct taxes in total tax receipts of the centre (Report on Currency and Finance, 88-89). Tax revenue was per cent in and stood at per cent and per cent in and 88-89, respectively. Tax measures initiated since 91 targeted in the substantial growth in tax revenue and also to help in improving structural imbalances and anomalies. These measures included drastic cut in the number of end use notifications in regard to excise and customs, a significant switchover from specific to ad valorem duties to strengthen built-in-revenue elasticity, extension of MODVAT, removal of distinction between closely and widely held domestic 126

16 Table 5.4: Share of Tax and Non-Tax Revenue in Total Revenue Receipts of the Central Government of India (As per cent of Total) Year Tax Revenue* Non-Tax Revenue Total Revenue Receipts (R.E.) * Includes UT Taxes assigned to local bodies. Note: Article 270 of the Constitution, has been retrospectively amended with effect from 1 st April, 96. Under the provisions of the Constitution (80 th Amendment) Act, 2000, prescribed share of States in the net proceeds of specified central taxes and duties is not form part of the Consolidated Fund of India. Source: Computed on the basis of the data compiled from various issues of Indian Public Finance Statistics. 127

17 companies and introduction of service tax on the basis of recommendations of Tax Reforms Committee, 91 (Economic Survey, 94-95). Consequently, tax revenue rose to Rs crore in from Rs crore in In , it fell to Rs crore. This unsatisfactory performance of tax revenue have to be viewed in the backdrop of fiscal measures which aimed at reducing the tax incidence through abolition of surcharges on direct taxes and customs in particular and also raise rationalization and reduction in excise as well to stimulate growth (Economic Survey, ). Further, some important fiscal measures were taken which included: reducing the peak rates of customs duties, rectifying anomalies like inverted duty structure, rationalizing excise duties with a movement towards a median CENVAT rate Table 5.5: Compound Growth Rates of Tax and Non-Tax Revenue of the Central Government of India (per cent) Year to to to to Tax Revenue Non-Tax Revenue Note: As in Table 4.2. Source: Computed on the basis of data compiled from various issues of Indian Public Finance Statistics. and revisiting the tax exemptions (Economic Survey, ). As a result, tax revenue increased to Rs crore in (R.E.) recorded the growth of 11 per cent per 128

18 annum from to and 12 per cent per annum from to As a proportion of total revenue receipts, tax revenue declined from per cent in to 70.9 per cent in Such decrease was mainly imputable to the reduction of customs duty provided by the tax reforms to improve both resource allocation and efficiency and to make Indian manufacturing competitive As per cent of Total Graph 5.4: Share of Tax and Non-Tax Revenue in Total Revenue Receipts of the Central Government of India Pre-reform period Post-reform period Tax Revenue Non-Tax Revenue Source: Computed on the basis of the data compiled from various issues of Indian Public Finance Statistics. (Bernardi and Fraschini, 2005). However, the share of tax revenue declined by about 4.61 per cent in , because of the general slow down in the economy and particularly in the industrial sectors (Economic Survey, ). The enactment of the FRBM Act, 2003 and its revenue led strategy has resulted in rise in the share of tax revenue to per cent in (R.E.). 129

19 Further, non-tax revenue was gone up from Rs crore in to Rs crore in largely on account of a considerable increase in the internal resources of the centre s public undertakings for the plan (Economic Survey, 82-83). Non-tax revenue also recorded a rise from Rs crore in to Rs crore in registered the growth of 15 per cent per annum during the pre-reform period of fifteen years. The major contributory factors were interest receipts, fiscal services, general services, economic services (Report on Currency and Finance, 88-89). The relative share of nontax revenue remained between 21 per cent to 26 per cent in the pre-reform period. During the post-reform period to , it registered the growth of 13 per cent per annum (from Rs crore to Rs crore) as compared to 15 per cent per annum in the pre-reform period. As a proportion of total revenue receipts, it hovered between 25 to 30 per cent and even reached at 33.7 per cent in Thereafter, it started declining and reached to per cent in (R.E.). This decline in relative share of non-tax revenue was mainly due to reduction in interest receipts, debt swap scheme and a softening interest rate regime (Report of Twelfth Finance Commission, ). Another reason for such decline was that the central government did not pay proper attention to non-tax reforms for revenue generation. This issue was raised in the Ninth Five Year Plan when it observed, Sufficient attention has 130

20 not been paid to realization of non-tax revenues. Areas from where non-tax revenues can be augmented are irrigation charges, royalties on minerals and revision of user charges on services rendered by the government. The findings of the study reveal that tax revenue as well as non-tax revenue has grown at the same rate of 15 per cent per annum in the pre-reform period and was higher than that of the post-reform period (12 per cent per annum and 13 per cent per annum, respectively). So more efforts need to be made to increase tax as well as non-tax revenue. Table 5.6 reveals the trend in revenue receipts of the centre as percentage of GDP since A large proportion of the increase in revenue receipts, which hovered around 8 to 10 per cent of GDP during the study period, is accounted by tax revenue (as shown in Graph 5.5). The tax-gdp ratio indicates the percentage of national income that is compulsorily transferred from private pockets to public exchequer, and it contributes a major share of government in the disposition of national income. This ratio, thus, signifies the economic role of a government in the national economy. The tax-gdp ratio has hovered around 6 to 7 per cent during pre-reform period. During post-reform period, the tax-gdp ratio of the centre declined from 7.67 per cent in to 5.87 per cent in The major factor to this decline was reduction in customs duty which was due to a phased reduction in import duty rates in the wake of commitments to the World Trade Organization (Srivastava, 2005). Secondly, a lower improvement in the tax-gdp ratio 131

21 Table 5.6: Total Revenue Receipts of the Central Government of India as per cent of GDP Year Tax Revenue Non-Tax Revenue Total Revenue Receipts (R.E.) Source: Computed on the basis of the data compiled from various issues of Indian Public Finance Statistics. 132

22 of the central government was also on account of service sector mostly remaining outside the tax net and its growing importance in the composition of GDP (Economic Survey, ). Efforts were made to take corrective measures with the introduction of service tax on three services in and its extension to 100 services in Consequently, the tax-gdp ratio increased to 9.14 per cent in (R.E.). On the other hand, non-tax revenue as per cent of GDP remained very low i.e., less than 3 per cent in the pre as well as post-reform period. This is because the central government did not pay adequate attention to non-tax sources for revenue generation. The non tax receipts as a Graph 5.5: Tax and Non-Tax Revenue of the Central Government of India as per cent of GDP As per cent of GDP Pre-reform period Post-reform period Tax Revenue Non-Tax Revenue Total Revenue Receipts Source: Computed on the basis of data compiled from various issues of Indian Public Finance Statistics. 133

23 percentage of GDP have varied from 2.72 per cent in to 2.98 per cent in , after which a declining trend is observed, mainly on account of a fall in interest receipts, as a result of the debt-swap scheme and a softening interest rate regime (Report of Twelfth Finance Commission, ). Non-tax revenue as a percentage of GDP has declined from 2.82 per cent in to 1.97 per cent in (R.E.). This decline is mainly on account of lower interest receipts from the states due to termination of the practice of on-lending to states, and interest relief as a result of the Debt Consolidation and Relief Facility (DCRF) following the recommendations of Twelfth FC (Report of Thirteenth Finance Commission, ). Composition of Capital Receipts The receipts of the government which create liabilities or reduce financial assets are called capital receipts. The components of capital receipts are market loans, external debt, small savings, state and public provident funds, special deposits of non-government provident funds, special securities and miscellaneous capital receipts. The data contained in Table 5.7 shows the distinctive features of the capital receipts i.e., its changing pattern over a period of time. It exhibits that there has been a wide variation in the market loans as a percentage of total capital receipts. The share of market loans was per cent in 75-76, which increased to per cent in and 134

24 further came down to 23.1 per cent in (as shown in Graph 5.6). In the post-reform period, it was per cent in and rose to per cent in and stood at 64. per cent in (R.E.). Year Table 5.7: Share of Different Components of Capital Receipts in Total Capital Receipts of the Central Government of India (As per cent of Total) Market Loans (net) External Debt (net) Small Savings (net) Provident Funds # Special Securities (net) Misc. Capital Receipts* Total Capital Receipts (R.E.) #Include state provident funds (net), public provident funds (net) and special deposits of non-government provident funds. *Include net receipts from deposits and advances, bonds issued under voluntary disclosure scheme, special bearer bonds, capital investment bonds, remittances, reserve funds, sales of securities from cash balance investment accounts, contingency fund, deposits from LIC, GIC, special borrowings from RBI against compulsory deposits, etc. Source: Computed on the basis of data compiled from various issues of Indian Public Finance Statistics. The share of external debt in the total capital receipts came down to per cent in from per cent in However, it is no longer an important 135

25 source of finance for the government. The relative share of external loans was 8.99 per cent in 93-94, which came down to 5.78 per cent in (R.E.). The contribution of small savings was per cent in It went up to 20.2 per cent in and rose further to 24.1 per cent in During post-reform period, the share of small savings was 13 per cent in and rose to the level of per cent in Graph 5.6 : Share of Different Components of Capital Receipts in Total Capital Receipts of the Central Government of India 120 As per cent of Total Pre-reform period Market Loans Small Savings Special Securities Post-reform period External Debt Provident funds Miscellaneous Capital Receipts Source: Computed on the basis of data compiled from various issues of Indian Public Finance Statistics. Provident funds, as proportion of capital receipts, were per cent in and increased to per cent in Its share was.46 per cent in which declined to 6.32 per cent in and further increased to per cent in (R.E.). 136

26 The share of special securities in the total capital receipts was 8.53 per cent in and declined to 0.93 per cent in During 93-94, it was per cent in and declined to per cent in (R.E.). The miscellaneous capital receipts showed a fluctuating trend during the study period. It was per cent in and reached to per cent in During post-reform period, it was -4.5 per cent in and reached to 3.85 per cent in (R.E.). It may thus be concluded that the share of market loans in total capital receipts is the highest throughout the study period. During 75-76, external debt constituted half of the capital receipts of the central government but thereafter, in the post-reform period, this share has continuously declined and has reached to 5 per cent only. This changing profile of capital receipts also had adverse impact on the government finances, as both market borrowing and small savings are more expensive sources of capital receipts and invariably lead to higher interest burden in future (Sinha and Pant, 2004). In the end, it may thus be concluded that total receipts, revenue receipts as well as capital receipts of the central government have grown at the rate of 14 per cent per annum throughout the study period. But the reform measures undertaken by the central government have not resulted into significant improvement in the revenue receipts as the growth of revenue receipts in the post-reform 137

27 period remained less than the pre-reform period. Whereas capital receipts recorded a lower growth in the post-reform period as compared to the pre-reform period. While studying the share of revenue and capital receipts in total receipts of the central government, it has been observed that for most of time, the share of revenue receipts has remained more than 60 per cent per annum. The share of revenue receipts as per cent of GDP has remained same in the pre and postreform period indicating quite clearly that no significant improvement could be achieved despite a long list of tax reforms undertaken by the central government to augment revenue. On the other hand, capital receipts have hovered between 2 to 6 per cent of GDP during the study period. Further, tax measures initiated by the central government since 91 have not resulted in substantial growth in tax revenue as compared to the pre-reform period. Similarly, non-tax revenue has registered high rate of growth in the pre-reform period than the post-reform period. This was due to the less attention paid by the central government to non-tax reforms for revenue generation. Looking at the share of tax and non-tax revenue, it is found that the main source of revenue of the central government is tax revenue which remained between 70 to 80 per cent of the total revenue receipts throughout the study period. Tax- GDP ratio has hovered around 6 to 7 per cent during pre as well as post-reform period. During the post-reform period, the tax-gdp ratio increased to 9 per cent in On 138

28 the other hand, non-tax revenue as per cent of GDP remained between less than 3 per cent in the pre as well as post-reform period. The analysis of capital receipts shows that the share of market loans is the highest throughout the study period. On the other hand, external debt has no longer an important source of financing for the government. The share of small savings has declined. This changing profile of capital receipts had adverse impact on the finances of the government, as market loans are an expensive source of capital receipts and individually led to higher interest burden. 139

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