India Rising - Faster Growth, Lower Indebtedness

Over the past 25 years, India's economy grew at an average real rate of close to 6 percent, with growth rates in recent years accelerating to 9 percent. Yet by 2005-06, the general government debt-to-GDP ratio was 34 percentage points higher t...

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Bibliographic Details
Main Authors: Pang, Gaobo, Pinto, Brian, Wes, Marina
Format: Policy Research Working Paper
Language:English
Published: World Bank, Washington, DC 2012
Subjects:
GDP
TAX
Online Access:http://documents.worldbank.org/curated/en/2007/06/7680962/india-rising-faster-growth-lower-indebtedness
http://hdl.handle.net/10986/7097
id okr-10986-7097
recordtype oai_dc
repository_type Digital Repository
institution_category Foreign Institution
institution Digital Repositories
building World Bank Open Knowledge Repository
collection World Bank
language English
topic ACCOUNTING
ACCOUNTING FRAMEWORK
ADVERSE EFFECT
AGRICULTURE
BALANCE SHEETS
BANK BAILOUTS
BANKS
BENCHMARK
BUDGET CONSTRAINTS
CAPITAL ACCOUNT LIBERALIZATION
CAPITAL EXPENDITURES
CAPITAL INFLOWS
COMMERCIAL BANKS
COMMODITIES
COMPETITIVENESS
CONSOLIDATION
CONSUMERS
CORPORATE INCOME TAX
CURRENT ACCOUNT
CURRENT ACCOUNT SURPLUSES
DEBT
DEBT DECOMPOSITION
DEBT DECOMPOSITIONS
DEBT DYNAMICS
DEBT HOLDERS
DEBT INTOLERANCE
DEBT SERVICE
DEBT SERVICE OBLIGATIONS
DEBT STOCK
DEBT SUSTAINABILITY
DEFICITS
DEREGULATION
DEVELOPMENT POLICY
DIVESTMENT
DOMESTIC INVESTMENT
ECONOMIC OUTCOMES
ECONOMIC REFORM
ECONOMIC TRENDS
EXCHANGE RATES
EXCISE TAXES
FINANCIAL INSTITUTIONS
FINANCIAL PERFORMANCE
FINANCIAL SECTOR
FISCAL DEFICITS
FIXED ASSETS
FIXED CAPITAL
FOREIGN COMPANIES
FOREIGN COMPETITION
FOREIGN CURRENCY
FOREIGN DIRECT INVESTMENT
FOREIGN EXCHANGE
FOREIGN EXCHANGE RESERVES
FOREIGN FIRMS
FOREIGN INVESTMENT
FORMAL ANALYSES
GDP
GOOD INVESTMENT CLIMATE
GOVERNMENT DEBT
GOVERNMENT DEFICIT
GOVERNMENT SPENDING
GROSS FIXED CAPITAL FORMATION
GROWTH POTENTIAL
GROWTH RATE
HARD BUDGET CONSTRAINTS
IMPORT BARRIERS
IMPORT TARIFFS
INFLATION
INSURANCE
INTEREST COVERAGE RATIO
INTEREST PAYMENTS
INTEREST RATES
INVENTORY
INVESTMENT ACTIVITY
INVESTMENT CLIMATE
INVESTMENT DECISIONS
INVESTMENT GROWTH
INVESTMENT PROJECTS
LATIN AMERICAN
LIQUIDITY
MATURITY STRUCTURE OF DEBT
MONOPOLY
NET SALES
OPEN ECONOMY
POLITICAL ECONOMY
PRIVATE INVESTMENT
PRIVATE SECTOR
PRIVATIZATION
PRODUCTIVITY GROWTH
PROFIT MARGIN
PROFIT MARGINS
PROFITABILITY
PROTECTIONISM
PUBLIC
PUBLIC EXPENDITURES
PUBLIC FINANCE
PUBLIC FINANCES
PUBLIC INFRASTRUCTURE
PUBLIC INVESTMENT
PUBLIC SECTOR
PUBLIC SPENDING
REAL GDP
REAL INTEREST RATE
REAL INTEREST RATES
REAL SECTOR
RECAPITALIZATION
RECAPITALIZATION COSTS
REGULATORY BURDEN
RESERVE BANK
RESERVE BANK OF INDIA
RESOURCE ALLOCATION
REVENUE MOBILIZATION
SOVEREIGN DEBT
TAX
TAX RATES
TAX SYSTEM
TOTAL FACTOR PRODUCTIVITY
TRADE LIBERALIZATION
TROUGH
VALUE ADDED
WORKING CAPITAL
spellingShingle ACCOUNTING
ACCOUNTING FRAMEWORK
ADVERSE EFFECT
AGRICULTURE
BALANCE SHEETS
BANK BAILOUTS
BANKS
BENCHMARK
BUDGET CONSTRAINTS
CAPITAL ACCOUNT LIBERALIZATION
CAPITAL EXPENDITURES
CAPITAL INFLOWS
COMMERCIAL BANKS
COMMODITIES
COMPETITIVENESS
CONSOLIDATION
CONSUMERS
CORPORATE INCOME TAX
CURRENT ACCOUNT
CURRENT ACCOUNT SURPLUSES
DEBT
DEBT DECOMPOSITION
DEBT DECOMPOSITIONS
DEBT DYNAMICS
DEBT HOLDERS
DEBT INTOLERANCE
DEBT SERVICE
DEBT SERVICE OBLIGATIONS
DEBT STOCK
DEBT SUSTAINABILITY
DEFICITS
DEREGULATION
DEVELOPMENT POLICY
DIVESTMENT
DOMESTIC INVESTMENT
ECONOMIC OUTCOMES
ECONOMIC REFORM
ECONOMIC TRENDS
EXCHANGE RATES
EXCISE TAXES
FINANCIAL INSTITUTIONS
FINANCIAL PERFORMANCE
FINANCIAL SECTOR
FISCAL DEFICITS
FIXED ASSETS
FIXED CAPITAL
FOREIGN COMPANIES
FOREIGN COMPETITION
FOREIGN CURRENCY
FOREIGN DIRECT INVESTMENT
FOREIGN EXCHANGE
FOREIGN EXCHANGE RESERVES
FOREIGN FIRMS
FOREIGN INVESTMENT
FORMAL ANALYSES
GDP
GOOD INVESTMENT CLIMATE
GOVERNMENT DEBT
GOVERNMENT DEFICIT
GOVERNMENT SPENDING
GROSS FIXED CAPITAL FORMATION
GROWTH POTENTIAL
GROWTH RATE
HARD BUDGET CONSTRAINTS
IMPORT BARRIERS
IMPORT TARIFFS
INFLATION
INSURANCE
INTEREST COVERAGE RATIO
INTEREST PAYMENTS
INTEREST RATES
INVENTORY
INVESTMENT ACTIVITY
INVESTMENT CLIMATE
INVESTMENT DECISIONS
INVESTMENT GROWTH
INVESTMENT PROJECTS
LATIN AMERICAN
LIQUIDITY
MATURITY STRUCTURE OF DEBT
MONOPOLY
NET SALES
OPEN ECONOMY
POLITICAL ECONOMY
PRIVATE INVESTMENT
PRIVATE SECTOR
PRIVATIZATION
PRODUCTIVITY GROWTH
PROFIT MARGIN
PROFIT MARGINS
PROFITABILITY
PROTECTIONISM
PUBLIC
PUBLIC EXPENDITURES
PUBLIC FINANCE
PUBLIC FINANCES
PUBLIC INFRASTRUCTURE
PUBLIC INVESTMENT
PUBLIC SECTOR
PUBLIC SPENDING
REAL GDP
REAL INTEREST RATE
REAL INTEREST RATES
REAL SECTOR
RECAPITALIZATION
RECAPITALIZATION COSTS
REGULATORY BURDEN
RESERVE BANK
RESERVE BANK OF INDIA
RESOURCE ALLOCATION
REVENUE MOBILIZATION
SOVEREIGN DEBT
TAX
TAX RATES
TAX SYSTEM
TOTAL FACTOR PRODUCTIVITY
TRADE LIBERALIZATION
TROUGH
VALUE ADDED
WORKING CAPITAL
Pang, Gaobo
Pinto, Brian
Wes, Marina
India Rising - Faster Growth, Lower Indebtedness
geographic_facet South Asia
India
relation Policy Research Working Paper; No. 4241
description Over the past 25 years, India's economy grew at an average real rate of close to 6 percent, with growth rates in recent years accelerating to 9 percent. Yet by 2005-06, the general government debt-to-GDP ratio was 34 percentage points higher than in the 1980s. The authors examine the links between public finances and growth in the post-1991 period. They argue that the main factor in the deterioration of government debt dynamics after the mid-1990s was a reform-induced loss in trade, customs, and financial repression taxes. Over time, these very factors plus lower entry barriers have contributed to stronger microfoundations for growth by increasing competition and hardening budget constraints for firms and financial sector institutions. The authors suggest that the impressive growth acceleration of the past few years, which is now lowering government indebtedness, can be attributed to the lagged effects of these factors, which have taken time to attain a critical mass in view of India's gradual reforms. Similarly, the worsening of public finances during the late 1990s can be attributed to the cumulative effects of tax losses, the negative growth effects of cuts in capital expenditure that were made to offset the tax losses, and a pullback in private investment (hence, growth and taxes), a situation which is now turning around. Insufficient capital expenditures have contributed to the infrastructure gap, which is seen as a constraint especially for rapid growth in manufacturing. The authors discuss ongoing reforms in revenue mobilization and fiscal adjustment at the state level, which if successfully implemented, will result in a better alignment of public finances with growth by generating further fiscal space for infrastructure and other development spending.
format Publications & Research :: Policy Research Working Paper
author Pang, Gaobo
Pinto, Brian
Wes, Marina
author_facet Pang, Gaobo
Pinto, Brian
Wes, Marina
author_sort Pang, Gaobo
title India Rising - Faster Growth, Lower Indebtedness
title_short India Rising - Faster Growth, Lower Indebtedness
title_full India Rising - Faster Growth, Lower Indebtedness
title_fullStr India Rising - Faster Growth, Lower Indebtedness
title_full_unstemmed India Rising - Faster Growth, Lower Indebtedness
title_sort india rising - faster growth, lower indebtedness
publisher World Bank, Washington, DC
publishDate 2012
url http://documents.worldbank.org/curated/en/2007/06/7680962/india-rising-faster-growth-lower-indebtedness
http://hdl.handle.net/10986/7097
_version_ 1764401903971598336
spelling okr-10986-70972021-04-23T14:02:33Z India Rising - Faster Growth, Lower Indebtedness Pang, Gaobo Pinto, Brian Wes, Marina ACCOUNTING ACCOUNTING FRAMEWORK ADVERSE EFFECT AGRICULTURE BALANCE SHEETS BANK BAILOUTS BANKS BENCHMARK BUDGET CONSTRAINTS CAPITAL ACCOUNT LIBERALIZATION CAPITAL EXPENDITURES CAPITAL INFLOWS COMMERCIAL BANKS COMMODITIES COMPETITIVENESS CONSOLIDATION CONSUMERS CORPORATE INCOME TAX CURRENT ACCOUNT CURRENT ACCOUNT SURPLUSES DEBT DEBT DECOMPOSITION DEBT DECOMPOSITIONS DEBT DYNAMICS DEBT HOLDERS DEBT INTOLERANCE DEBT SERVICE DEBT SERVICE OBLIGATIONS DEBT STOCK DEBT SUSTAINABILITY DEFICITS DEREGULATION DEVELOPMENT POLICY DIVESTMENT DOMESTIC INVESTMENT ECONOMIC OUTCOMES ECONOMIC REFORM ECONOMIC TRENDS EXCHANGE RATES EXCISE TAXES FINANCIAL INSTITUTIONS FINANCIAL PERFORMANCE FINANCIAL SECTOR FISCAL DEFICITS FIXED ASSETS FIXED CAPITAL FOREIGN COMPANIES FOREIGN COMPETITION FOREIGN CURRENCY FOREIGN DIRECT INVESTMENT FOREIGN EXCHANGE FOREIGN EXCHANGE RESERVES FOREIGN FIRMS FOREIGN INVESTMENT FORMAL ANALYSES GDP GOOD INVESTMENT CLIMATE GOVERNMENT DEBT GOVERNMENT DEFICIT GOVERNMENT SPENDING GROSS FIXED CAPITAL FORMATION GROWTH POTENTIAL GROWTH RATE HARD BUDGET CONSTRAINTS IMPORT BARRIERS IMPORT TARIFFS INFLATION INSURANCE INTEREST COVERAGE RATIO INTEREST PAYMENTS INTEREST RATES INVENTORY INVESTMENT ACTIVITY INVESTMENT CLIMATE INVESTMENT DECISIONS INVESTMENT GROWTH INVESTMENT PROJECTS LATIN AMERICAN LIQUIDITY MATURITY STRUCTURE OF DEBT MONOPOLY NET SALES OPEN ECONOMY POLITICAL ECONOMY PRIVATE INVESTMENT PRIVATE SECTOR PRIVATIZATION PRODUCTIVITY GROWTH PROFIT MARGIN PROFIT MARGINS PROFITABILITY PROTECTIONISM PUBLIC PUBLIC EXPENDITURES PUBLIC FINANCE PUBLIC FINANCES PUBLIC INFRASTRUCTURE PUBLIC INVESTMENT PUBLIC SECTOR PUBLIC SPENDING REAL GDP REAL INTEREST RATE REAL INTEREST RATES REAL SECTOR RECAPITALIZATION RECAPITALIZATION COSTS REGULATORY BURDEN RESERVE BANK RESERVE BANK OF INDIA RESOURCE ALLOCATION REVENUE MOBILIZATION SOVEREIGN DEBT TAX TAX RATES TAX SYSTEM TOTAL FACTOR PRODUCTIVITY TRADE LIBERALIZATION TROUGH VALUE ADDED WORKING CAPITAL Over the past 25 years, India's economy grew at an average real rate of close to 6 percent, with growth rates in recent years accelerating to 9 percent. Yet by 2005-06, the general government debt-to-GDP ratio was 34 percentage points higher than in the 1980s. The authors examine the links between public finances and growth in the post-1991 period. They argue that the main factor in the deterioration of government debt dynamics after the mid-1990s was a reform-induced loss in trade, customs, and financial repression taxes. Over time, these very factors plus lower entry barriers have contributed to stronger microfoundations for growth by increasing competition and hardening budget constraints for firms and financial sector institutions. The authors suggest that the impressive growth acceleration of the past few years, which is now lowering government indebtedness, can be attributed to the lagged effects of these factors, which have taken time to attain a critical mass in view of India's gradual reforms. Similarly, the worsening of public finances during the late 1990s can be attributed to the cumulative effects of tax losses, the negative growth effects of cuts in capital expenditure that were made to offset the tax losses, and a pullback in private investment (hence, growth and taxes), a situation which is now turning around. Insufficient capital expenditures have contributed to the infrastructure gap, which is seen as a constraint especially for rapid growth in manufacturing. The authors discuss ongoing reforms in revenue mobilization and fiscal adjustment at the state level, which if successfully implemented, will result in a better alignment of public finances with growth by generating further fiscal space for infrastructure and other development spending. 2012-06-05T14:47:08Z 2012-06-05T14:47:08Z 2007-06 http://documents.worldbank.org/curated/en/2007/06/7680962/india-rising-faster-growth-lower-indebtedness http://hdl.handle.net/10986/7097 English Policy Research Working Paper; No. 4241 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research South Asia India