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

Author/Editor: Simone, Alejandro ; Topalova, Petia
Publication Date: August 01, 2009
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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(s): Debt sustainability | Fiscal management | Fiscal policy | Fiscal reforms | Fiscal sustainability | India | Public debt

Author's Keyword(s): Fiscal rules | fiscal sustainability | public debt
Publication Date: August 01, 2009
Format: Paper
Stock No: WPIEA2009175 Pages: 40
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