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

Articles by Sudipto MundleSubscribe to Sudipto Mundle

Massive Capital Expenditure, Modest Fiscal Consolidation, and Cut in Pillars of Social Safety Net

The finance minister’s five budgets, including the 2023–24 budget, demonstrate a welcome commitment to transparency. They also reveal a clear strategy of combining high capital expenditure-led growth with fiscal consolidation. But post the pandemic, these strategic priorities have been pursued at the cost of weakening the two key pillars of India’s social safety net—food subsidy and the Mahatma Gandhi National Rural Employment Guarantee Act income support.

The Budget Bets on Capital Expenditure to Revive Growth

The budget has bet on a hard strategy of government capital expenditure-led growth. This article looks at how the massive increase in capex is planned along with continuing fiscal consolidation in the context of the budget strategy. It also discusses the receipts and expenditure budgets. Finally, it concludes after discussing the likely macroeconomic impact of the budget.

Fiscal Compression, Jeopardised Recovery, the Humanitarian Crisis and Reforms

This paper assesses the impact of the budget on the economic recovery, debt dynamics and fiscal–monetary policy interaction. It also looks at how the budget has addressed issues of lives and livelihoods. It concludes by noting that the fiscal stance of compression in the 2021–22 budget has jeopardised an already faltering economic recovery that is now jeopardised by the second wave of the pandemic.


Fiscal Restraint Trumps Fiscal Stimulus

The 2020 Union Budget has failed to provide any fiscal stimulus based upon the assumption that there is no fiscal space for providing growth stimulus. In doing so, it missed out on the opportunity of leveraging an additional fiscal space of around 10% of the gross domestic product that could have been tapped through revenue and expenditure rationalisation measures.


Subsidies, Merit Goods and the Fiscal Space for Reviving Growth

The incidence of implicit and explicit budget subsidies provided by the central and state governments has declined from about 12.9% of the gross domestic product in 1987–88 to 10.3% at present, with the bulk of these subsidies being provided by the states and about half being spent on non-merit subsidies. This paper argues that rationalisng non-merit subsidies is one of several deep fiscal reform measures that could together free up massive fiscal space that can be used to finance an inclusive growth revival strategy.

Inclusive Fiscal Adjustment for Reviving Growth

Unrealistic revenue projections leading to strong expenditure compression is primarily responsible for India’s growth deceleration. Growth will decelerate further without a programme of deep fiscal adjustment. How a fiscal space, amounting to over 6% of the gross domestic product, can be freed through such an adjustment programme is demonstrated. This space can be potentially used for an inclusive public expenditure-led strategy for reviving growth.

Governance Performance of Indian States

Building on a methodology developed in an earlier paper, the results of an exercise in ranking Indian states based on five sets of criteria--infrastructure, social services, fiscal performance, justice, law and order, and quality of the legislature--are presented to show how states have fared relative to each other between 2001-02 and 2011-12. What emerges is that five of the six best-performing states of 2001 were also the best performers in 2011. Similarly, four of the six worst performers of 2001 were also among the worst performers of 2011. A consequence of such stickiness of rankings at the top and the bottom is growing regional disparity between the more- and less-developed states.

The Quality of Governance

There is a core concept of good governance, the combination of authority and responsibility to pursue the common good, that has remained stable over millennia. Building on this concept the paper develops several indices of the quality of governance and applies these indices to rank major states in India. The governance indices have been derived from the three main pillars of the government, i e, the legislature, the judiciary and the executive. Performance on each dimension of governance has been measured using indicators that are all based exclusively on factual data, not perceptions. The paper shows that there is a strong correlation between governance quality and the level of development in a state. When we correct for the effect of development on the quality of governance, it turns out that some of the poorer states significantly improve their rank, implying their governance performance is much better than would be expected at their level of development.

Stimulus, Recovery and Exit Policy: G20 Experience and Indian Strategy

There are large variations among the g20 countries in their deceleration experiences, transmission mechanisms and their current macroeconomic outlook. In an integrated global economy, it is essential that the major economies coordinate their policies. But coordination does not imply simultaneous stimulus withdrawal from all g20 countries. Indeed, a phased withdrawal is probably the best guarantee against the risk of a negative global shock leading to another recession in the event of a simultaneous stimulus withdrawal from all g20 countries. Hence, this paper argues that each country needs to set the timing, scale and composition of its stimulus withdrawal keeping in mind its own macroeconomic outlook.

Practices in Fiscal Federalism

Federalism and Fiscal Transfers in India by C Rangarajan and D K Srivastava (New Delhi: Oxford University Press), 2011; pp xxii + 257, Rs 695.

Redefining the Discourse on Fiscal Federalism

that has only begun to change recently following the 73rd and 74th constitutional Redefining the Discourse amendments.
on Fiscal Federalism Transfers to States Political Economy of Federalism in India by M Govinda Rao and Nirvikar Singh; Oxford University Press, India, 2005;

Policies, Paradigms and Development Debate at Close of Twentieth Century

at Close of Twentieth Century Sudipto Mundle Economics of development emerged in a milieu of market failures following the great depression and new deal of 1930s when societies in the east as well as the west and the north as well as the south embraced the idea of the interventionist state. It is now generally recognised that apart from making macro-economic stability, governments in developing countries must intervene in sectors like health care, education, infrastructurat develolpment and conservation of environment.


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