The Challenge of Fiscal Adjustment in a Democracy: The Case of India

 
Author/Editor: Purfield, Catriona ; Hausmann, Ricardo
 
Publication Date: September 01, 2004
 
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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: India's fiscal problem has deep roots in its federal fiscal system, where multiple players find it difficult to coordinate adjustment. The size and closed nature of the Indian economy, aided by its deep domestic capital market and large captive pool of domestic savings, has disguised the cost of fiscal laxity and complicated the building of a consensus on reform. The new fiscal responsibility act establishes a new rules-based system to overcome this coordination failure. To strengthen the framework, we recommend an autonomous scorekeeper and the extension of similar rules to the state governments as part of a comprehensive reform of the federal system.
 
Series: Working Paper No. 04/168
Subject(s): Fiscal management | India | Debt | Fiscal reforms

Author's Keyword(s): Fiscal responsibility legislation | federal relations | fiscal deficits | debt
 
English
Publication Date: September 01, 2004
ISBN/ISSN: 1934-7073 Format: Paper
Stock No: WPIEA1682004 Pages: 29
Price:
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