Abstract
India needs to sustain post-Covid fiscal improvements reflected in buoyant revenue growth, reduced pressure on expenditure and a reduction in public debt and deficits. However, the debt ratio of the general government (Union and States) remains at an elevated level. A targeted reduction in debt and deficit, a compositional shift of the Union government’s capital expenditure, and a state specific rebalancing of the FRBM framework may help fasten the process of fiscal recovery and growth.
Pinaki Chakraborty is currently working for the Asian Development Bank on post-covid fiscal recovery in South Asia and on public financial management and governance reforms. This paper has been prepared for the conference in honour of Dr. C. Rangarajan, organised by the Madras School of Economics, on 21 and 22 March, 2023, Chennai
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Notes
- 1.
It is important to note that small economies of the World “had more prolonged mobility restrictions than other EMDEs” (The World Bank, 2023). In India, the mobility increased significantly in 2022–23.
- 2.
Note: Mobility numbers refer to change in the number of visitors in retail and recreation areas or in time spent there relative to the baseline: the median day in the 5 weeks from 3 January to 6 February 2020 (Asian Development Bank, 2022).
- 3.
- 4.
For details see Chakraborty, Jha and Jaluka (2021).
- 5.
Effective Revenue Deficit = Revenue deficit- Grants in aid for creation of capital assets. The Union gives GIA to states and other agencies to create capital assets, but as the ownership of these assets don’t lie with the Union, they form a part of revenue expenditure, and hence revenue deficit. ERD is hence, meant to depict that part of RD which is spent only on consumptive items.
- 6.
Karnataka was the first state to enact its FRBM Act in September 2002 followed by Kerala (2003), Tamil Nadu (2003) and Punjab (2004). Sikkim and West Bengal were the last states to enact their FRBM Acts in 2010.
- 7.
Economic Survey, 2016–17.
- 8.
This was an entry level condition.
- 9.
The CAG had the discretionary authority to review implementation of any Act dealing with financial matters. But the amendment allowed it to be made a mandatory review.
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Chakraborty, P. (2023). Post-covid Fiscal Recovery in India: Uncertainty, Growth, and Fiscal Prudence. In: Srivastava, D.K., Shanmugam, K.R. (eds) India’s Contemporary Macroeconomic Themes. India Studies in Business and Economics. Springer, Singapore. https://doi.org/10.1007/978-981-99-5728-6_4
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