India’s Experience with Fiscal Rules : An Evaluation and The Way Forward

Author/Editor:

Alejandro Simone ; Petia Topalova

Publication Date:

August 1, 2009

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

This paper examines India's experience with fiscal rules with a view to inform the design of a possible successor fiscal framework to the FRBMA. Among several proposals to strengthen the FRBMA, a framework that focuses medium-term fiscal policy on debt sustainability by the use of a medium term debt target, and annual nominal expenditure growth rules is proposed. This approach tackles the deficit bias at its core and enables countercyclical fiscal policy through automatic stabilizers. Numerical targets should be supported by structural reform measures for both revenues and expenditures, while the coverage of the fiscal rules should be expanded.

Series:

Working Paper No. 09/175

Subject:

English

Publication Date:

August 1, 2009

ISBN/ISSN:

9781451873221/1018-5941

Stock No:

WPIEA2009175

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

40

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