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India’s Experience with Fiscal Rules; An Evaluation and The Way Forward

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  • Alejandro Simone
  • Petia Topalova

Abstract

This paper examines India's experience with fiscal rules with a view to inform the design of a possible successor fiscal framework to the FRBMA. Among several proposals to strengthen the FRBMA, a framework that focuses medium-term fiscal policy on debt sustainability by the use of a medium term debt target, and annual nominal expenditure growth rules is proposed. This approach tackles the deficit bias at its core and enables countercyclical fiscal policy through automatic stabilizers. Numerical targets should be supported by structural reform measures for both revenues and expenditures, while the coverage of the fiscal rules should be expanded.

Suggested Citation

  • Alejandro Simone & Petia Topalova, 2009. "India’s Experience with Fiscal Rules; An Evaluation and The Way Forward," IMF Working Papers 09/175, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:09/175
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    Cited by:

    1. Chakraborty, Pinaki, 2017. "Federalism, Fiscal Space, and Public Investment Spending: Do Fiscal Rules Impose Hard Budget Constraints?," ADBI Working Papers 637, Asian Development Bank Institute.
    2. Pinaki Chakraborty, 2017. "Federalism, fiscal space, and public investment spending: do fiscal rules impose hard-budget constraints?," Chapters,in: Central and Local Government Relations in Asia, chapter 3, pages 103-129 Edward Elgar Publishing.

    More about this item

    Keywords

    Debt sustainability; Fiscal management; Public debt; Fiscal policy; Fiscal reforms; Fiscal sustainability; Fiscal rules; India; expenditure; expenditure growth; fiscal discipline;

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