State Fiscal Reforms in India : Progress and Prospects
Following two decades of relatively rapid growth, and a decade of liberalization, there is growing confidence within India, as well as internationally, about the state of the economy, and India's development potential. Nonetheless, and particu...
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| Format: | Debt and Creditworthiness Study |
| Language: | English en_US |
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Washington, DC
2013
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| Online Access: | http://documents.worldbank.org/curated/en/2004/11/5400847/india-state-fiscal-reforms-india-progress-prospects http://hdl.handle.net/10986/14609 |
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okr-10986-146092021-04-23T14:03:18Z State Fiscal Reforms in India : Progress and Prospects World Bank FISCAL REFORMS STATE GOVERNMENTS LIBERALIZATION FISCAL CONSTRAINTS PUBLIC SPENDING POLICY IMPLEMENTATION HUMAN DEVELOPMENT REGIONAL DISPARITY FISCAL ADJUSTMENTS FISCAL DEFICITS STRUCTURAL REFORMS SUBSIDIES POWER SECTOR REFORM COMMERCIAL POLICY TAXATION INSTITUTIONAL REFORM PLANNING SYSTEMS Following two decades of relatively rapid growth, and a decade of liberalization, there is growing confidence within India, as well as internationally, about the state of the economy, and India's development potential. Nonetheless, and particularly since the late nineties, when India's states experienced a sharp fiscal deterioration, they have faced a squeeze on development spending, particularly acute in the poorer ones. In response, most state governments embarked on fiscal reforms, aimed at reducing deficits, and enabling effective interventions in priority areas. States in India play an increasingly important role in devising, and implementing policies to stimulate economic growth, and promote human development. But the performance of India's states is increasingly divergent, State deficits and debt levels rose sharply in the late nineties, and off-budget liabilities also increased rapidly. This sharp fiscal deterioration gave rise to state-level fiscal adjustment efforts, which in recent years have shown some signs of improved fiscal performance. Concerns about the level, and composition of fiscal deficits remain. The report states that a halt in reforms would endanger the states quality and quantity of productive expenditures, while debt levels would steadily build. It reviews expenditure reforms - particularly salaries, at the core of expenditure restructuring - and, pensions as a rapidly-mounting liability, which can be contained by parametric reforms, and longer-term structural reforms, while also examines subsidies, exemplifying the difficulties involved in reforming subsidy regimes. Regarding power sector reforms, commercial discipline should be a top priority. Public enterprise reforms are outlined, suggesting that while immediate fiscal gains may not be achieved, such reforms will prevent future budgetary support from keeping loss-making enterprises afloat. On examining revenue reforms, the report indicates these are essential to reduce fiscal imbalances, suggesting the elimination of tax on inter-state exports is critical, and should proceed with, or without the value-added tax (VAT), specifying tax administration reforms are perhaps more important than tax reforms. On strengthening the fiscal federal framework, it is recommended States need more flexibility to borrow, but under a centrally-imposed aggregate borrowing cap. Three institutional reform would therefore help fiscal federalism in India: Finance Commission as a permanent body; entrusting a single agency in compiling timely state-level fiscal data; and, reviewing the role of the Planning Commission. 2013-07-25T21:23:56Z 2013-07-25T21:23:56Z 2004-11-10 http://documents.worldbank.org/curated/en/2004/11/5400847/india-state-fiscal-reforms-india-progress-prospects http://hdl.handle.net/10986/14609 English en_US CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank Washington, DC Economic & Sector Work :: Debt and Creditworthiness Study Economic & Sector Work South Asia India |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
FISCAL REFORMS STATE GOVERNMENTS LIBERALIZATION FISCAL CONSTRAINTS PUBLIC SPENDING POLICY IMPLEMENTATION HUMAN DEVELOPMENT REGIONAL DISPARITY FISCAL ADJUSTMENTS FISCAL DEFICITS STRUCTURAL REFORMS SUBSIDIES POWER SECTOR REFORM COMMERCIAL POLICY TAXATION INSTITUTIONAL REFORM PLANNING SYSTEMS |
| spellingShingle |
FISCAL REFORMS STATE GOVERNMENTS LIBERALIZATION FISCAL CONSTRAINTS PUBLIC SPENDING POLICY IMPLEMENTATION HUMAN DEVELOPMENT REGIONAL DISPARITY FISCAL ADJUSTMENTS FISCAL DEFICITS STRUCTURAL REFORMS SUBSIDIES POWER SECTOR REFORM COMMERCIAL POLICY TAXATION INSTITUTIONAL REFORM PLANNING SYSTEMS World Bank State Fiscal Reforms in India : Progress and Prospects |
| geographic_facet |
South Asia India |
| description |
Following two decades of relatively
rapid growth, and a decade of liberalization, there is
growing confidence within India, as well as internationally,
about the state of the economy, and India's development
potential. Nonetheless, and particularly since the late
nineties, when India's states experienced a sharp
fiscal deterioration, they have faced a squeeze on
development spending, particularly acute in the poorer ones.
In response, most state governments embarked on fiscal
reforms, aimed at reducing deficits, and enabling effective
interventions in priority areas. States in India play an
increasingly important role in devising, and implementing
policies to stimulate economic growth, and promote human
development. But the performance of India's states is
increasingly divergent, State deficits and debt levels rose
sharply in the late nineties, and off-budget liabilities
also increased rapidly. This sharp fiscal deterioration gave
rise to state-level fiscal adjustment efforts, which in
recent years have shown some signs of improved fiscal
performance. Concerns about the level, and composition of
fiscal deficits remain. The report states that a halt in
reforms would endanger the states quality and quantity of
productive expenditures, while debt levels would steadily
build. It reviews expenditure reforms - particularly
salaries, at the core of expenditure restructuring - and,
pensions as a rapidly-mounting liability, which can be
contained by parametric reforms, and longer-term structural
reforms, while also examines subsidies, exemplifying the
difficulties involved in reforming subsidy regimes.
Regarding power sector reforms, commercial discipline should
be a top priority. Public enterprise reforms are outlined,
suggesting that while immediate fiscal gains may not be
achieved, such reforms will prevent future budgetary support
from keeping loss-making enterprises afloat. On examining
revenue reforms, the report indicates these are essential to
reduce fiscal imbalances, suggesting the elimination of tax
on inter-state exports is critical, and should proceed with,
or without the value-added tax (VAT), specifying tax
administration reforms are perhaps more important than tax
reforms. On strengthening the fiscal federal framework, it
is recommended States need more flexibility to borrow, but
under a centrally-imposed aggregate borrowing cap. Three
institutional reform would therefore help fiscal federalism
in India: Finance Commission as a permanent body; entrusting
a single agency in compiling timely state-level fiscal data;
and, reviewing the role of the Planning Commission. |
| format |
Economic & Sector Work :: Debt and Creditworthiness Study |
| author |
World Bank |
| author_facet |
World Bank |
| author_sort |
World Bank |
| title |
State Fiscal Reforms in India : Progress and Prospects |
| title_short |
State Fiscal Reforms in India : Progress and Prospects |
| title_full |
State Fiscal Reforms in India : Progress and Prospects |
| title_fullStr |
State Fiscal Reforms in India : Progress and Prospects |
| title_full_unstemmed |
State Fiscal Reforms in India : Progress and Prospects |
| title_sort |
state fiscal reforms in india : progress and prospects |
| publisher |
Washington, DC |
| publishDate |
2013 |
| url |
http://documents.worldbank.org/curated/en/2004/11/5400847/india-state-fiscal-reforms-india-progress-prospects http://hdl.handle.net/10986/14609 |
| _version_ |
1764428722780241920 |