Key Terms & Concepts — UPSC Mains
Off-Budget Borrowing
"Government borrowing that is routed through state-owned corporations, special purpose vehicles, or public sector entit..."
Government borrowing that is routed through state-owned corporations, special purpose vehicles, or public sector entities rather than appearing directly in the government's official fiscal deficit — concealing the true extent of public debt.
Important fiscal governance concept flagged by the Reserve Bank of India's State Finances Report and the 15th Finance Commission (Chair: N.K. Singh, 2021-26). Off-budget borrowings allow governments to understate their real fiscal deficits while maintaining the appearance of FRBM compliance. The 16th Finance Commission (Chair: Arvind Panagariya, 2026-31) is expected to address off-budget liabilities in its recommendations. Use in GS-3 (Public Finance, Macroeconomics) and GS-2 (Federalism, Finance Commission).
Kerala's off-budget borrowings through KIIFB (Kerala Infrastructure Investment Fund Board) may add several percentage points to the state's true fiscal deficit beyond what the official budget numbers show, raising concerns about fiscal transparency.