IDEAS home Printed from https://ideas.repec.org/a/sae/millen/v9y2018i3p295-317.html
   My bibliography  Save this article

An Analysis of Fiscal Policy in an Emerging Economy: Innovative and Sustainable Fiscal Rules in India

Author

Listed:
  • Upinder Sawhney

Abstract

Fiscal management is considered to be effective only if fiscal imbalances do not create any macroeconomic instability in an economy. In a federal structure, the performance of sub-national constituents as well as the national government is significant for growth and development. Fiscal imbalances set in the Indian economy both at the national and sub-national levels during 1980s and became a matter of concern by the end of the last century. Accordingly, fiscal responsibility legislations (FRLs) were enacted by the two layers (union and state) of the government. It is not the enactment but the effective implementation leading to fiscal discipline and consolidation which is important. This article seeks to examine the Fiscal Responsibility and Budget Management Act, 2003 of a developed Indian state situated in the northwest of India, that is, Punjab. Various fiscal consolidation targets are reviewed against the actual outcomes of those fiscal parameters which are outlined in the FRL of the State. Some policy pre-scriptions for innovative and sustainable fiscal rules have been suggested.

Suggested Citation

  • Upinder Sawhney, 2018. "An Analysis of Fiscal Policy in an Emerging Economy: Innovative and Sustainable Fiscal Rules in India," Millennial Asia, , vol. 9(3), pages 295-317, December.
    • Handle: RePEc:sae:millen:v:9:y:2018:i:3:p:295-317
    DOI: 10.1177/0976399618805629
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/0976399618805629
    Download Restriction: no
    File URL: https://libkey.io/10.1177/0976399618805629?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Afonso, Antonio & Strauch, Rolf, 2007. "Fiscal policy events and interest rate swap spreads: Evidence from the EU," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 17(3), pages 261-276, July.
    2. Mrs. Nina Budina & Ms. Andrea Schaechter & Miss Anke Weber & Mr. Tidiane Kinda, 2012. "Fiscal Rules in Response to the Crisis: Toward the "Next-Generation" Rules: A New Dataset," IMF Working Papers 2012/187, International Monetary Fund.
    3. Mr. Ian Lienert, 2010. "Should Advanced Countries Adopt a Fiscal Responsibility Law?," IMF Working Papers 2010/254, International Monetary Fund.
    4. Mrs. Nina Budina & Mr. Tidiane Kinda & Ms. Andrea Schaechter & Miss Anke Weber, 2012. "Fiscal Rules at a Glance: Country Details from a New Dataset," IMF Working Papers 2012/273, International Monetary Fund.
    5. Rangarajan , C. & Prasad, Abha, 2012. "Managing state debt and ensuring solvency : the Indian experience," Policy Research Working Paper Series 6039, The World Bank.
    6. Mr. George Kopits & Mr. Steven A. Symansky, 1998. "Fiscal Policy Rules," IMF Occasional Papers 1998/011, International Monetary Fund.
    7. M. Govinda Rao & Pinaki Chakraborty, 2006. "Multilateral adjustment lending to states in India: Hastening fiscal correction or softening the budget constraint?," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 15(3), pages 335-357.
    8. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sacchi, Agnese & Salotti, Simone, 2015. "The impact of national fiscal rules on the stabilisation function of fiscal policy," European Journal of Political Economy, Elsevier, vol. 37(C), pages 1-20.
    2. Asatryan, Zareh & Castellón, César & Stratmann, Thomas, 2018. "Balanced budget rules and fiscal outcomes: Evidence from historical constitutions," Journal of Public Economics, Elsevier, vol. 167(C), pages 105-119.
    3. Mr. Serhan Cevik, 2019. "Back to the Future: Fiscal Rules for Regaining Sustainability," IMF Working Papers 2019/242, International Monetary Fund.
    4. Serhan Cevik, 2019. "Anchor me: the benefits and challenges of fiscal responsibility," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 33(1), pages 33-47, May.
    5. Dritan Shoraj & Marionela Memetaj, 2017. "Impact of Leadership versus Organizational Effectiveness in the Secondary Banking Sector in Albania," European Journal of Economics and Business Studies Articles, Revistia Research and Publishing, vol. 3, May - Aug.
    6. Gladys A. A. Nabieu & Godfred A. Bokpin & Achampong K. Osei & Patrick O. Asuming, 2021. "The effects of fiscal governance on fiscal performance in Sub‐Saharan Africa," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(4), pages 5746-5761, October.
    7. Abdul Hadi, 2017. "Dams and Displacement in Turkey and Pakistan," European Journal of Economics and Business Studies Articles, Revistia Research and Publishing, vol. 3, May - Aug.
    8. Afonso, António & Huart, Florence & Tovar Jalles, João & Stanek, Piotr, 2022. "Twin deficits revisited: A role for fiscal institutions?," Journal of International Money and Finance, Elsevier, vol. 121(C).
    9. Musaev, Rasul (Мусаев, Расул) & Malakhov, Anton (Малахов, Антон), 2014. ""Budget Law" in Russia: experience and prospects [«Бюджетное Правило» В России: Опыт И Перспективы]," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 6, pages 161-170, December.
    10. Lekha S. Chakraborty, 2015. "Fiscal Seigniorage “Laffer-curve effect†on Central Bank Autonomy in India," Working Papers id:7754, eSocialSciences.
    11. Juan Carlos Hatchondo & Leonardo Martinez & César Sosa-Padilla, 2016. "Debt Dilution and Sovereign Default Risk," Journal of Political Economy, University of Chicago Press, vol. 124(5), pages 1383-1422.
    12. Combes, Jean-Louis & Minea, Alexandru & Sow, Moussé, 2017. "Is fiscal policy always counter- (pro-) cyclical? The role of public debt and fiscal rules," Economic Modelling, Elsevier, vol. 65(C), pages 138-146.
    13. Pierre Mandon, 2014. "Evaluating Treatment Effect and Causal Effect of Fiscal Rules on Procyclicality," Working Papers hal-01015439, HAL.
    14. Uchida, Yuki & Ono, Tetsuo, 2021. "Political economy of taxation, debt ceilings, and growth," European Journal of Political Economy, Elsevier, vol. 68(C).
    15. Guerguil, Martine & Mandon, Pierre & Tapsoba, René, 2017. "Flexible fiscal rules and countercyclical fiscal policy," Journal of Macroeconomics, Elsevier, vol. 52(C), pages 189-220.
    16. Juan Carlos Hatchondo & Leonardo Martinez & Francisco Roch, 2012. "Fiscal rules and the sovereign default premium," Working Paper 12-01, Federal Reserve Bank of Richmond.
    17. Levieuge, Grégory & Lucotte, Yannick & Pradines-Jobet, Florian, 2021. "The cost of banking crises: Does the policy framework matter?," Journal of International Money and Finance, Elsevier, vol. 110(C).
    18. Pierre Mandon, 2014. "Evaluating Treatment Effect and Causal Effect of Fiscal Rules on Procyclicality New assessments on old debate: rules vs. discretion," CERDI Working papers halshs-01015756, HAL.
    19. Pierre Mandon, 2014. "Evaluating Treatment Effect and Causal Effect of Fiscal Rules on Procyclicality New assessments on old debate: rules vs. discretion," Working Papers halshs-01015760, HAL.
    20. Beetsma, Roel & Debrun, Xavier & Fang, Xiangming & Kim, Young & Lledó, Victor & Mbaye, Samba & Zhang, Xiaoxiao, 2019. "Independent fiscal councils: Recent trends and performance," European Journal of Political Economy, Elsevier, vol. 57(C), pages 53-69.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:millen:v:9:y:2018:i:3:p:295-317. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.