ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

Articles by D K SrivastavaSubscribe to D K Srivastava

Balancing Growth with Fiscal Consolidation

This article examines the implications of the structural changes in the budget both for the current year and in the medium term.

The Future of Fiscal Consolidation in India

The future of fiscal consolidation in India under alternative assumptions, keeping in mind both the growth and fiscal consolidation objectives, is the core focus of this article. Alternative scenarios are cast focusing on sustainable combinations of fiscal deficit and government debt relative to the gross domestic product, providing guidance for the way in which the union’s Fiscal Responsibility and Budget Management Act, 2018 may be recast.


Does India Need Vaccine Federalism?

This paper focuses on the identification of the key determinants of the interstate differences in the incidence of COVID-19. It finds that it is best to have a dynamic, transparent, and explicit formula for the interstate allocation of vaccines under conditions of deficient supply. This is ideally handled by an objective expert body.


Fiscal Consolidation and FRBM in the COVID-19 Context

The fiscal consolidation projections provided by the Fifteenth Finance Commission, including its alternative paths, have been rendered out of alignment because of the COVID-19’s deleterious economic impact.The commission has also recommended that the centre’s Fiscal Responsibility and Budget Mana

Taxing Petroleum Products

With the lowering of global crude prices in recent months, the expectation was that this would benefi t the users of petroleum products, especially in the industry and transport sectors, and the consumers. This expectation has so far been belied. The central government has not only increased the taxes under its control but also focused on increasing relatively more, the non-shareable portion of excise duty, thereby constraining the fi scal space for the state governments. The continued high retail prices have implications for infl ation as well as potential growth. This situation needs to be carefully monitored.

Underlying Drivers of India’s Potential Growth

Global growth is expected to be tepid in the medium term and India will have to depend on domestic growth drivers. In order to better understand the future, a new methodological framework is proposed to estimate potential growth in India with a focus on capacity output till 2029–30. The domestic savings rate was identified as the most potent growth-augmenting driver.

Themes from a Life in Public Finance

Public Economics: Theory and Policy: Essays in Honor of Amaresh Bagchi edited by M Govinda Rao and Mihir Rakshit (New Delhi: Sage Publications), 2011; pp 364, Rs 795.

Vertical Sharing and Horizontal Distribution of Resources: The Equity and Efficiency Trade-off

Examining the key recommendations of the Thirteenth Finance Commission that have a bearing on vertical and horizontal transfers aimed at correcting imbalances in the system, this paper takes a critical look at these two aspects as well as the grants given to states. It also reviews the overall design of transfers by decomposing these to identify their vertical and equalising content, pointing to problems that could arise in the long run. Yet it concedes that despite several drawbacks, the commission has arrived at a mechanism for transfers that includes some desirable features.

Reforming India's Fiscal Transfer System: Resolving Vertical and Horizontal Imbalances

Two central problems in a fiscal transfer system relate to resolving vertical and horizontal imbalances. This paper looks at the methodological background of fiscal transfers followed by recent finance commissions, particularly the Twelfth Finance Commission. It is noted that in India, there is long-term stability in the share of states after transfers in the combined centre and state revenues. This stability depends on linking the share of states in the transfers, particularly tax devolution, with the difference in the buoyancies of central and state taxes. In the context of horizontal imbalance, it is argued that some of the recent finance commissions have implicitly followed an axiomatic approach to tax devolution and brought in some normative elements in determining grants. In spite of large differences in fiscal capacities, a high degree of equalisation has been achieved. It is shown that for tfc recommended transfers, nearly 88 per cent of the needed equalisation was achieved while devoting 50 per cent of transfers to resolving vertical imbalance. A methodology is also developed to determine the weights of the vertical and equalising components of transfers through devolution.

Rural Poverty in Madhya Pradesh

This study examines the incidence of rural poverty in Madhya Pradesh based on a field survey of 2,208 rural households spread over 11 districts. The issues of poverty are examined in a multidimensional perspective with emphasis given to issues related to access to publically provided services like health and education. There is a need for greater and more effective fiscal intervention for poverty reduction and employment generation. The implementation of the National Rural Employment Guarantee Act may prove to be an effective intervention in reducing poverty in rural areas of the state.

FRBM Act and Eleventh Plan Approach Paper

This article argues that the time phasing problem highlighted in the approach paper to the Eleventh Plan is the outcome of specific assumptions used in the projections, which are not always justified. Following the fiscal correction path releases resources for the revenue plan through falling interest payments and increases capital expenditure by allowing the permissible fiscal deficit to be fully used for that purpose. It gives the required balance in resources available for the revenue plan and capital plan. The profiles of saving and investment make a growth rate of 8.5 to 9 per cent achievable within the plan period. These would be possible by adhering to the fiscal responsibility targets and not by compromising on them.

Fiscal Deficits and Government Debt

This paper examines the long-term profile of the fiscal deficit and debt relative to GDP in India, with a view to analysing debt-deficit sustainability issues, along with relevant considerations to determine a suitable medium- and short-term fiscal policy stance. It is argued that large structural primary deficits and interest payments relative to GDP have had an adverse effect on growth in recent years. There is a clear need to bring down the combined debt-GDP ratio from its current level, which is in excess of 80 per cent of GDP. The process of adjustment can be considered in two phases: adjustment and stabilisation. In the adjustment phase, the fiscal deficit should be reduced in each successive year until the revenue deficit, and correspondingly, government dissaving, is eliminated. In the second phase, the fiscal deficit could be stabilised at 6 per cent of GDP and the debt-GDP ratio would eventually stabilise at 56 per cent.


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