India : Why Fiscal Adjustment Now

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dc.creatorPinto, Brian
dc.creatorZahir, Farah
dc.date2013-07-10T15:49:16Z
dc.date2013-07-10T15:49:16Z
dc.date2004-03
dc.date.accessioned2026-07-01T01:29:03Z
dc.descriptionIndia's growth performance has been impressive over the last two decades. But its sustainability has been in question, first with the 1991 fiscal-balance of payments crisis (BoP), and then again after 1997/98, when fiscal deficits returned to the 10 percent of GDP range and government debt grew. This paper analyzes the deterioration in India's public finances and presents evidence suggesting that, in the absence of a fiscal adjustment, low inflation and high reserves may have been pursued at the expense of long-run growth and poverty reduction. Resolving this inflation-external vulnerability-growth policy trilemma requires fiscal adjustment. In making its case, the paper shows, first, that fiscal fundamentals have weakened after 1997/98 even when compared with the pre-1991 crisis period. This has continued in spite of the recent record lows in interest rates. Second, the fiscal stance is not conducive to long-run growth and poverty reduction because capital spending has been cut to accommodate higher interest payments and other current spending, with expenditures on the social sectors stagnating. Third, without a fiscal adjustment, the debt burden is likely to reach unmanageable levels by the end of the Tenth Plan period. In contrast, a phased adjustment beginning now and focusing on a relatively small set of reforms is likely to improve debt dynamics substantially over the same horizon, while also promoting faster growth and poverty reduction.
dc.formatapplication/pdf
dc.formattext/plain
dc.identifierhttp://documents.worldbank.org/curated/en/2004/03/3092272/india-fiscal-adjustment-now
dc.identifierhttps://hdl.handle.net/10986/14441
dc.identifierhttps://doi.org/10.1596/1813-9450-3230
dc.identifier.urihttp://hdl.handle.net/123456789/418496
dc.languageEnglish
dc.languageen_US
dc.publisherWorld Bank: Washington, DC
dc.relationPolicy, Research working paper;no. WPS 3230
dc.rightsCC BY 3.0 IGO
dc.rightshttp://creativecommons.org/licenses/by/3.0/igo/
dc.rightsWorld Bank
dc.subjectADMINISTRATIVE COSTS
dc.subjectAGRICULTURE
dc.subjectBAILOUT COSTS
dc.subjectBALANCE OF PAYMENTS
dc.subjectBALANCE SHEET
dc.subjectBALANCE SHEETS
dc.subjectBANK DEPOSITS
dc.subjectBANKS
dc.subjectBENCHMARK
dc.subjectBONDS
dc.subjectBORROWING
dc.subjectCAPITAL EXPENDITURES
dc.subjectCAPITAL FLOWS
dc.subjectCAPITAL GAIN
dc.subjectCENTRAL BANK
dc.subjectCIVIL SERVICE
dc.subjectCOUNTRY COMPARISONS
dc.subjectDEBT
dc.subjectDEFAULT RISK
dc.subjectDEMAND DEPOSITS
dc.subjectDEPOSIT INSURANCE
dc.subjectDEVALUATION
dc.subjectDOMESTIC BORROWING
dc.subjectDOMESTIC INFLATION
dc.subjectECONOMIC GROWTH
dc.subjectELECTRICITY
dc.subjectEMPLOYMENT
dc.subjectEQUILIBRIUM
dc.subjectEVERGREENING
dc.subjectEXCHANGE RATE
dc.subjectEXPORTS
dc.subjectEXTERNAL SHOCKS
dc.subjectFINANCIAL INSTITUTIONS
dc.subjectFINANCIAL INTERMEDIATION
dc.subjectFINANCIAL SECTOR
dc.subjectFISCAL ADJUSTMENT
dc.subjectFISCAL DEFICIT
dc.subjectFISCAL DEFICITS
dc.subjectFISCAL POLICY
dc.subjectFISCAL REFORM
dc.subjectFISCAL RESTRAINT
dc.subjectFISCAL YEAR
dc.subjectFOREIGN BANKS
dc.subjectFOREIGN EXCHANGE
dc.subjectFOREIGN EXCHANGE RESERVES
dc.subjectGAMBLING
dc.subjectGDP
dc.subjectGOVERNMENT BONDS
dc.subjectGOVERNMENT BUDGET
dc.subjectGOVERNMENT DEBT
dc.subjectGOVERNMENT GUARANTEES
dc.subjectGOVERNMENT SECURITIES
dc.subjectGOVERNMENT SPENDING
dc.subjectGROSS DOMESTIC PRODUCT
dc.subjectGROWTH POLICY
dc.subjectGROWTH RATE
dc.subjectGROWTH RATES
dc.subjectIMPORTS
dc.subjectINFLATION
dc.subjectINFLATION RATES
dc.subjectINSURANCE
dc.subjectINTEREST RATES
dc.subjectLENDING RATES
dc.subjectLIQUIDITY
dc.subjectLIQUIDITY RATIO
dc.subjectLOW INTEREST RATES
dc.subjectM3
dc.subjectMACROECONOMIC POLICY
dc.subjectMACROECONOMIC STABILITY
dc.subjectMUTUAL FUND
dc.subjectNATIONALIZED BANKS
dc.subjectPENSION LIABILITIES
dc.subjectPENSIONS
dc.subjectPER CAPITA INCOME
dc.subjectPOVERTY ALLEVIATION
dc.subjectPRESENT VALUE
dc.subjectPRIVATE BANKS
dc.subjectPRIVATE SECTOR
dc.subjectPRIVATIZATION
dc.subjectPROVISIONS
dc.subjectPUBLIC DEBT
dc.subjectPUBLIC DEBT MANAGEMENT
dc.subjectPUBLIC ENTERPRISES
dc.subjectPUBLIC FINANCE
dc.subjectPUBLIC OWNERSHIP
dc.subjectPUBLIC SAVINGS
dc.subjectPUBLIC SECTOR
dc.subjectPUBLIC SECTOR DEBT
dc.subjectPUBLIC SPENDING
dc.subjectREAL EXCHANGE RATE
dc.subjectREAL EXCHANGE RATES
dc.subjectREAL GDP
dc.subjectREAL INTEREST RATE
dc.subjectREAL INTEREST RATES
dc.subjectREAL SECTOR
dc.subjectREGIONAL RURAL BANKS
dc.subjectRESERVE BANK OF INDIA
dc.subjectRETURN ON INVESTMENT
dc.subjectREVENUE MOBILIZATION
dc.subjectREVENUE SOURCES
dc.subjectSAVINGS RATES
dc.subjectTAX
dc.subjectTAX REFORM
dc.subjectTAX REVENUE
dc.subjectTIME DEPOSITS
dc.subjectTOTAL REVENUE
dc.subjectTRANSPORT
dc.subjectUSER CHARGES FISCAL BALANCE
dc.subjectBALANCE OF PAYMENTS
dc.subjectPOVERTY MITIGATION
dc.subjectPRIVATE INVESTMENTS
dc.subjectFISCAL REFORMS
dc.subjectFISCAL SUSTAINABILITY
dc.titleIndia : Why Fiscal Adjustment Now

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