Enhancing Fiscal Transparency and Reporting in India

IMF Working Papers, November 13, 2020

Source details

Authors: Patrick Blagrave, Fabien Gonguet
Publication: IMF Working Papers, Working Paper No. 2020/250, Issue: 250, Volume: 2020
Publication date: November 13, 2020
Pages: 21
DOI: https://doi.org/10.5089/9781513559599.001
ISBN: 9781513559599
ISSN: 1018-5941
Stock No: WPIEA2020250
Summary of purpose: Assess current fiscal transparency and reporting practices in India, quantify implications of off-budget financing, and recommend reforms to improve fiscal reporting and monitoring.

Current fiscal transparency and reporting practices in India place it behind most peer G20 economies, implying policy makers are lacking critical data to ground their fiscal and other economic planning decisions.
The increasing use of off-budget financing at the central government level in recent years represents a key example of reduced transparency.
Estimates provided in the paper:
- Public sector borrowing requirement (PSBR) estimates show a more expansionary stance in recent years than ‘headline’ deficit figures presented in budget documents.
- An extended notion of the fiscal deficit also shows a more expansionary stance in recent years than ‘headline’ deficit figures presented in budget documents.
The paper investigates the current state of fiscal reporting practices in India and identifies gaps that restrict comprehensive assessment of fiscal position and risks.

Off-budget financing is highlighted as a major contributor to reduced transparency at the central government level.
Comparison to peer G20 economies indicates India lags in fiscal transparency and reporting practices, though specific comparative numeric rankings are not provided in the summary.
The paper provides quantified alternative deficit and borrowing requirement measures that alter the assessment of fiscal stance relative to headline budget figures.

Enhance IT systems to improve fiscal data collection, consolidation, and reporting.
Strengthen central-local coordination to better capture fiscal activities across levels of government.
Gradual transition to accrual accounting to provide a more comprehensive and timely picture of fiscal liabilities and contingent obligations.
Improve reporting practices to incorporate off-budget transactions into public sector fiscal metrics (through estimates such as an extended fiscal deficit and public sector borrowing requirement).

Subject: Budget planning and preparation; Fiscal reporting; Fiscal risks; Fiscal transparency; Government debt management; Public financial management (PFM)
Keywords: Africa; borrowing need; Budget planning and preparation; Budget Systems; cash-basis accounting regime; Fiscal Reporting; Fiscal risks; General government data; Global; government activity; Government debt management; Government Statistics; India; Union government; WP

IMF Working Paper No. 2020/250, November 13, 2020 — Patrick Blagrave and Fabien Gonguet