Mumbai, May 9 (KNN) The RBI has called for setting up ‘State Finance Commissions’ for state governments. It discussed public sector borrowing requirements and continuity of the Finance Commission in view of the financial management requirements of the states.

The 15th Finance Commission headed by Chairman N.K. Singh Singh held a detailed meeting with the Governor and Deputy Governors of RBI here.

According to RBI, one of the key issues discussed during the meeting was the necessity of setting up 'State Finance Commissions' for state governments.

"It was felt that this (continuity of the Finance Commission) was required more in view of the fiscal management requirements of the states, especially given the absence of mid-term reviews of awards granted by the Finance Commission, as it used to happen earlier with the awards granted by the Planning Commission," RBI said in a statement.

Other issues, especially on the need for expenditure codes and role of states in growth and inflation, were also discussed.

Specific factors driving fiscal slippages include UDAY or Ujwal Discom Assurance Yojana, in the past besides farm loan waivers and income support schemes in 2018-19 revised estimates, said the central bank adding that importance of states in the economy has increased with the shift in the composition of government finances.

"Outstanding debt as percentage of GDP rising despite moderation in interest payment as percentage of revenue receipts."