India's Fiscal Situation

Publisher Website
Google Scholar
Abstract
This chapter discusses the current state of Indian fiscal affairs. After the crisis of 1991, there was a period during which the fiscal deficit was somewhat decreased, but it has since increased, and prospects for its reduction without further policy measures are quite bare. It specifically examines the state finances, tax and expenditure reform, reduction of subsidies, and disinvestment. The current precarious fiscal situation of states is the result of increasing implicit and explicit subsidies on goods and services supplied by the government (electricity, irrigation water, transport, education, health) with virtually no attempt to raise revenues to finance them. A significant part of the fiscal correction in the early 1990s was through reductions in development spending, particularly capital spending, which could jeopardize growth. Increasing the tax capacity of the states and reducing transfers from the central government to the states as much as possible will enhance fiscal policy-making in India.

This publication has 0 references indexed in Scilit: