Policy Note on the Unfinished Fiscal Reform Agenda in Indian States

Both central and state governments have carried out significant correction of financial imbalances since 2000, through the implementation of fiscal reforms including enactment of fiscal responsibility (FR) acts. However, the improvement in the fina...

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Bibliographic Details
Main Author:	World Bank
Format:	Policy Note
Language:	English en_US
Published:	Washington, DC 2013
Subjects:	ABSENTEEISM ACCOUNTABILITY FOR RESULTS ACCOUNTING ADMINISTRATIVE REFORMS AGGREGATE BUDGET ANNUAL BUDGET ANNUAL DEFICIT ANNUAL REPORT ANNUAL TARGETS APPROPRIATION ARREARS BANK POLICY BLOCK GRANTS BUDGET ALLOCATION BUDGET CONSTRAINT BUDGET DOCUMENTS BUDGET MANAGEMENT BUDGET SUPPORT BUDGETARY RESOURCES BUDGETING CAPITAL BUDGET CAPITAL EXPENDITURE CAPITAL INVESTMENT CAPITAL OUTLAY CAPITAL SPENDING CASH BALANCES CASH DEFICIT CENTRAL AUTHORITIES CENTRAL FUNDS CENTRAL GOVERNMENT CIVIL SERVICE CIVIL SERVICE PAY CONSTRAINED RESOURCE CONTINGENT LIABILITIES CORPORATE GOVERNANCE CORRUPTION CREDIT RATING CREDIT RATING AGENCIES CREDITWORTHINESS CURRENT ACCOUNT DEBT DEBT CONSOLIDATION DEBT LEVEL DEBT OVERHANG DEBT RELIEF DEBT RESTRUCTURING DEBT SERVICING DEBT STOCK DEBT SUSTAINABILITY DEBT SWAP DEBTS DEFAULTERS DEFICIT REDUCTION DEFICITS DEGREE OF RISK DISCLOSURE OF INFORMATION DOMESTIC CAPITAL DOMESTIC CAPITAL MARKET ECONOMIC CLASSIFICATION ECONOMIC GROWTH ECONOMIC GROWTH RATES EDUCATION SPENDING EFFICIENCY IMPROVEMENTS EFFICIENCY IN PUBLIC SPENDING EFFICIENCY OF PUBLIC SPENDING EXPENDITURE EXPENDITURE CUTS EXPENDITURES EXTERNAL ASSISTANCE FINANCE MINISTRY FINANCES FINANCIAL ACCOUNTABILITY FINANCIAL INFORMATION FINANCIAL MARKET FINANCIAL PERFORMANCE FINANCIAL POSITION FINANCIAL SUPPORT FISCAL ADJUSTMENT FISCAL BALANCE FISCAL CONSOLIDATION FISCAL CRISIS FISCAL DEFICIT FISCAL DISCIPLINE FISCAL HEALTH FISCAL INCENTIVES FISCAL MANAGEMENT FISCAL OUTCOMES FISCAL PERFORMANCE FISCAL POLICY FISCAL POSITION FISCAL PRESSURES FISCAL REFORM FISCAL REFORMS FISCAL RISKS FISCAL STABILITY FISCAL STANCE FISCAL SUSTAINABILITY GOLDEN RULE GOVERNMENT GRANTS GOVERNMENT SPENDING GROWTH RATE HARD BUDGET CONSTRAINT HEALTH EXPENDITURE HEALTH OUTCOMES HEALTH SERVICES HEALTH SPENDING HUMAN DEVELOPMENT IMMOVABLE PROPERTY INCOME LEVEL INFLATION INFORMATION DISCLOSURE INFRASTRUCTURE PROJECTS INTEREST BURDEN INTEREST EXPENDITURE INTEREST EXPENDITURES INTEREST PAYMENTS INTEREST RATE INTERNATIONAL DEVELOPMENT INVESTING INVESTMENT CLIMATE INVESTMENT PROJECTS ISSUANCE ISSUANCE OF GUARANTEES LEGAL AGREEMENTS LENDERS LEVEL OF DEBT LIABILITY LIQUIDITY LIQUIDITY CONSTRAINTS LIQUIDITY PROBLEMS LOAN MACROECONOMIC STABILITY MARKET PRICE MEDIUM-TERM FISCAL PLAN MINISTRY OF FINANCE MONEY TERMS NATIONAL GOVERNMENT NET LENDING OUTPUT DATA OUTSTANDING DEBT PAYMENT DEFAULT PENSION PENSIONS POLICY DECISIONS POLITICAL ECONOMY POLITICAL STABILITY PORTFOLIO POVERTY REDUCTION PRIVATE INVESTMENT PROCUREMENT PROCESS PROGRAMS PROVISION OF GOODS PUBLIC AWARENESS PUBLIC EDUCATION PUBLIC ENTERPRISE PUBLIC ENTERPRISE REFORM PUBLIC ENTERPRISES PUBLIC EXPENDITURE PUBLIC EXPENDITURE EFFICIENCY PUBLIC EXPENDITURE MANAGEMENT PUBLIC HEALTH PUBLIC MONEY PUBLIC PROCUREMENT PUBLIC SECTOR PUBLIC SECTOR EMPLOYEES PUBLIC SERVICES PUBLIC SPENDING PUBLIC WORKS QUALITY OF PUBLIC SPENDING REFORM AGENDA REFORM PLAN REFORM PROGRAM REGISTRATION FEES RESERVE RESERVE BANK RESOURCE ALLOCATIONS RESOURCE CONSTRAINTS RETURNS REVENUE GROWTH RISK SHARING ROAD TRANSPORT SALES TAX SERVICE DELIVERY SOCIAL SERVICE SOCIAL SERVICES SOCIAL WELFARE SPENDING LEVELS STAMP DUTIES STAMP DUTY STATE BUDGET STATE ENTERPRISES STATE GOVERNMENT STATE GOVERNMENTS STATE GUARANTEE STATE GUARANTEES STATE TAX STATE TAXES STRUCTURAL ADJUSTMENT TAX TAX ADMINISTRATION TAX BASE TAX COLLECTIONS TAX EFFORT TAX EVASION TAX INCIDENCE TAX POLICY TAX RATES TAX REFORM TAX REVENUE TAX REVENUES TAX SYSTEM TAXPAYERS TOTAL EXPENDITURE TOTAL SPENDING TRADE UNION TRANSPARENCY TREASURY TREASURY BILLS UNSECURED LOANS WAGE EXPENDITURE WAGE EXPENDITURES
Online Access:	http://documents.worldbank.org/curated/en/2008/06/16259465/policy-note-unfinished-fiscal-reform-agenda-indian-states http://hdl.handle.net/10986/12398

Description
Summary:	Both central and state governments have carried out significant correction of financial imbalances since 2000, through the implementation of fiscal reforms including enactment of fiscal responsibility (FR) acts. However, the improvement in the finances of all states in aggregate hides wide disparities between them. Some state governments are already on a sustainable path while some others are far from it. Some have complied with their Fiscal Responsibility acts both in letter and spirit, while others have accumulated off-budget liabilities to unsustainable levels, circumventing the FR acts, which did not specify caps on such liabilities. Moreover, fiscal correction by an Indian state is only a means to an end. The end that is, achievement of development goals-depends on how fiscal space is used, or how efficiently the money is spent to produce outputs and the desired outcomes. A strong fiscal performance will lead both to an improvement in the overall balance via improved structure of revenue and expenditures, with incentives in place to ensure sustained fiscal improvement, and better outcomes associated with budget outlays. Note one examines progress with overall fiscal correction by Indian states during 2000-06. Note two presents case studies of fiscal adjustment experience in three selected states. Finally, note three illustrates how expenditure efficiency could be measured so as to address the challenge of translating outlays to outcomes.

Policy Note on the Unfinished Fiscal Reform Agenda in Indian States

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