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Budget Credibility in India: Assessment through PEFA framework

Author

Listed:
  • Jena, Pratap Ranjan

    (National Institute of Public Finance and Policy)

  • Sikdar, Satadru

    (National Institute of Public Finance and Policy)

Abstract

The recent debate regarding likely shortfall of revenue receipts in the central government budget needs to be seen in the light of longer term assessment of budget credibility. The uncertainty in one year could be an outlier. A credible budget while respecting budget contracts voted in the parliament, also improves the efficiency of government expenditure. Deviations, as a result of weak capacity to forecast revenue, pose risks to both existing and future program management. The paper assesses the budget credibility at central government level since 2006-07 following the PEFA framework. The record of budget credibility is examined using the performance indicators that are acknowledged as international standards. The paper looks at revenue and expenditure at aggregate and decomposed level to understand the variance from the budget projection. While the deviation from projected revenue and expenditure at aggregate level was found to be low, there are concerns when fiscal variable are put through the budget credibility test at decomposed level. Strengthening the overarching public financial management system by effectively implementing the budget reform programs undertaken intermittently will further improve the credibility of budget.

Suggested Citation

  • Jena, Pratap Ranjan & Sikdar, Satadru, 2019. "Budget Credibility in India: Assessment through PEFA framework," Working Papers 19/284, National Institute of Public Finance and Policy.
    • Handle: RePEc:npf:wpaper:19/284
    Note: Working Paper 284, 2019
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Jacob, Jannet Farida & Chakraborty, Lekha, 2021. "COVID-19 and Public Investment for Children: The case of Indian State of Karnataka," Working Papers 21/355, National Institute of Public Finance and Policy.
    2. Kaur, Amandeep & Chakraborty, Lekha S, 2021. "Covid19 and Public Finance for Children: A case study of State of Odisha, India," MPRA Paper 111924, University Library of Munich, Germany.
    3. Nayak, Dinesh Kumar & Jena, Pratap Ranjan, 2025. "Bridging the Budget Divide: How PEFA Assessments and PFM Reforms Diagnose the Budget Reliability," Working Papers 25/435, National Institute of Public Finance and Policy.
    4. Kaur, Amandeep & Chakraborty, Lekha, 2022. "Covid19 and Public Finance for Children: A case study of State of Odisha, India," Working Papers 22/368, National Institute of Public Finance and Policy.
    5. Kaur, Amandeep & Jha, Ajay Narayan & Chakraborty, Lekha, 2023. "G20 and Climate Responsive Budgeting," Working Papers 23/401, National Institute of Public Finance and Policy.
    6. Sri Hari Nayudu A. & Chakraborty, Lekha, 2025. "Fiscal Transparency and Budgetary Processes in India: Issues before the 16th Finance Commission," Working Papers 25/424, National Institute of Public Finance and Policy.
    7. Jena, Pratap Ranjan & Singh, Abhishek, 2020. "Emerging Fiscal Priorities and Resource Concerns: A Perspective on Fiscal Management from Madhya Pradesh," Working Papers 20/303, National Institute of Public Finance and Policy.
    8. Jacob, Jannet Farida & Chakraborty, Lekha S, 2021. "Public Finance for Children: The case of Indian State of Karnataka," MPRA Paper 109520, University Library of Munich, Germany, revised Aug 2021.

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    Keywords

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    JEL classification:

    • H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems
    • H68 - Public Economics - - National Budget, Deficit, and Debt - - - Forecasts of Budgets, Deficits, and Debt
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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