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Strengthening fiscal legislation through extrinsic and intrinsic incentives

Author

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  • Ashima Goyal

    (Indira Gandhi Institute of Development Research)

Abstract

Sovereigns can always find ways to escape or to dilute rules, so incentives and commitment are essential complements to fiscal responsibility acts. Government expenditure is required for growth in India, especially education, health, creating human and physical capital, but the combined fiscal deficit is already among the highest in the world. High borrowing costs imply a large share of revenues is committed for debt service. Borrowing only for investment, including in human capital, is the way to sustain growth while reducing debt ratios. The paper examines the experience of national and sub-national Indian governments and explores ways to improve intrinsic as well as extrinsic incentives for productive expenditure within the structure of Indian fiscal federalism.

Suggested Citation

  • Ashima Goyal, 2026. "Strengthening fiscal legislation through extrinsic and intrinsic incentives," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2026-012, Indira Gandhi Institute of Development Research, Mumbai, India.
    • Handle: RePEc:ind:igiwpp:2026-012
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    File URL: http://www.igidr.ac.in/pdf/publication/WP-2026-012.pdf
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    Keywords

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    JEL classification:

    • H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General

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