Journal Issue
Share
Article

India: Selected Issues and Statistical Appendix

Author(s):
International Monetary Fund
Published Date:
September 2002
Share
  • ShareShare
Show Summary Details

III. The Fiscal Situation in International Perspective1

A. Introduction

1. The fiscal situation has long been the key macroeconomic challenge facing India. Consequently a vast body of literature has emerged, assessing various aspects of the fiscal problem in India—tax performance, the composition and control of expenditure, states finances, fiscal federal arrangements, the debt build-up and associated sustainability analysis.2 This Chapter briefly summarizes key fiscal developments of the last decade, and focuses on India’s fiscal position in an international perspective, and options for fiscal consolidation.

2. The rest of the Chapter is organized as follows: Section B presents key fiscal developments during the past decade. Section C compares India’s fiscal position with other emerging markets. Section D discusses other countries’ experiences with fiscal consolidation with a view to gleaning some lessons that may be applicable in India. Section E presents some illustrative fiscal consolidation scenarios and Section F concludes.

B. Key Fiscal Developments During the Last Decade

3. Fiscal consolidation was undertaken in the early 1990s in the context of Fund-supported adjustment and reform program.3 The consolidated general government deficit that reached a peak of 9.6 percent of GDP in 1990/91, was reduced to around 6.7 percent of GDP by 1995/96 (see Figure III. I).4 The consolidation relied mainly on cuts in expenditure (relative to GDP) by the central government on defense, subsidies, and capital expenditure, as well as modest expenditure reductions by the states. Over this period, the general government current (or revenue) deficit declined from 4 percent of GDP in 1990/91 to 3¼ percent of GDP in 1995/96, and the corresponding primary deficit fell from 5 percent of GDP in 1990/91 to 1½ percent of GDP in 1995/96.

Figure III.1.India: Fiscal Deficit Measures, 1988/89–2001/02 1/

Source: Indian authorities; and staff estimates.

1/ The 2001/02 axe staff estimates based on preliminary outcomes for central government.

4. The fiscal improvement however proved to be short-lived, and by 2001/02, the various deficit measures were back at their pre-crisis levels. Expenditure increases—without corresponding increases in revenues or offsetting measures elsewhere—led to renewed deterioration in the central government deficit, from 4.3 percent of GDP in 1995/96 to over 6 percent of GDP in 2001/02. The same trend emerged in the states’ deficits, which deteriorated sharply beginning in 1998/99 (see Figure III.1). By 2001/02, the general government overall deficit was over 10 percent of GDP; the primary deficit was back up to around 5 percent of GDP; while the current deficit is estimated at about 6 percent of GDP.

5. The deterioration in the fiscal position in the second half of the 1990s relates to three main factors:

  • The substantial increase in the wage bill. The Fifth Pay Commission led to large pay increases and generous changes to pension benefits.5 However, the corresponding reduction in staff numbers recommended by the Pay Commission was not initially implemented, and thus central government expenditure on wages and salaries rose from 1.4 percent of GDP in 1996/97, to 1.7 percent of GDP in the two subsequent years. Pay revisions following the Pay Commission also led to a deterioration in state finances.6

  • The “transition costs” associated with the structural reforms. Up until the early 1990s, a significant portion of the government deficit was financed through financial repression, with high reserve deposit and statutory liquidity requirements inducing banks to hold government bonds at below market rates. Such a system allowed the government to run large deficits for a long period, but contributed to the weakening of the banking system. Financial sector reforms in the early 1990s resulted in deficit financing at closer to market rates which, in the context of high primary deficits, resulted in continuous increases in the interest bill (from less than 4 percent of GDP in 1990/91 to 43/4 percent of GDP by 2000/01). Reductions in tariffs also had a larger than anticipated impact on customs collections.7

  • The stagnation of the revenue-GDP ratio in the 1990s, notwithstanding major tax reforms. The post-crisis tax reforms were based on the recommendations of the Tax Reforms Committee (the Chelliah committee). More recently, an Advisory Group on Tax Policy and Tax Administration was appointed to make recommendations for the next phase of tax reforms, both at the center and state levels. Its report (the Shome report) was completed in May 2001. The main objectives of the reforms were to improve the buoyancy of tax revenue and to increase the share of direct taxes in total revenues. The reforms were successful at bringing about a shift in the composition of revenue towards direct taxation. However, gross tax revenue to GDP fell by around 1 percentage point of GDP over the decade.

Table III.1.India: Central Government Tax Revenues, 1990/91–2000/01

(In percent of GDP)

1990/911991/921992/931993/941994/951995/961996/971997/981998/991999/002000/01
Gross tax revenue10.110.310.08.89.19.49.49.18.38.99.0
Corporate tax0.91.21.21.21.41.41.41.31.41.61.7
Income tax0.91.01.11.11.21.31.31.11.21.31.3
Excise taxes4.34.34.13.73.73.43.33.23.13.23.3
Customs duties3.63.43.22.62.63.03.12.62.32.52.3
Other taxes0.30.40.40.30.20.30.30.30.30.30.2
VDIS0.7
Less: States’ share2.62.62.72.62.52.52.62.92.22.32.5
Net tax revenue7.67.77.26.26.76.96.86.36.06.66.6

6. Changes in the sectoral composition of the Indian economy have proven to be a headwind to increasing the revenue to GDP ratio. Tax revenue in India is derived predominantly from the industrial sector, particularly income and excise tax which have become relatively more important as customs revenue has fallen as a share of total revenue. However, the industrial sector has remained relatively stagnant during the past two decades. Agriculture remains largely untaxed, and its share in GDP has been shrinking. In contrast, the service sector has expanded rapidly but taxes on services account for only a small fraction of revenue (as the service sector remains largely unorganized). The declining customs revenue has only been partially off-set by the increase in revenue resulting from increase in the number of tax assessees (to around 24 million by 2001/02).

7. Non-tax revenue declined from 3 percent of GDP in 1992/93 to 2.7 percent of GDP by 1996/97, but has since trended upwards. Non-tax revenue is predominantly interest receipts on government loans to states and public enterprises (around 60 percent in 2000/01) and dividends and profits (including from the RBI). The growth in dividends and profits in recent years (from around 12 percent of total non-tax revenue in 1996/97, to 25 percent in 2000/01), seems to be driving the trend in non-tax revenue.

India-Sectoral Shares, 1950/51-200011

8. Another characteristic of India’s fiscal position is the fact that revenue targets have persistently been missed and expenditure (particularly on capital) is compressed to compensate for revenue shortfalls. Figure III.2 shows that actual revenue has generally fallen short of budgeted revenue, reflecting a tendency for overly optimistic assumptions on GDP growth, buoyancy, and base year outcomes. Typically, attempts are made to compensate for revenue shortfalls by compressing expenditures. However, the degree of compression has not been enough to offset the revenue shortfalls in recent years—reflecting the rigidities in current expenditure due to the large share of sending devoted to wages, interest payments, and subsidies. Moreover, the efforts to minimize deviations from the deficit targets have resulted in a tendency to compress capital expenditure. Capital expenditure declined from over 4 percent of GDP in 1987/88, to 1¾ percent of GDP in 2000/01—with obvious potentially adverse consequences for infrastructure and growth (see Chapter II).

Figure III.2.

India: Key Fiscal Aggregates, Budget versus Actual, 1991/92–2001/02

Citation: 2002, 193; 10.5089/9781451818567.002.A003

Source: Data provided by the Indian authorities.

1/ Budget ratios are with respect to the nominal GDP assumption used in the Budget; actuals use the actual (revised) nominal GDP numbers.

9. Fiscal imbalances have not spilled over into inflation or external imbalances: A key reason is the increase in private savings-investment balance.8 Private savings increased as a share of GDP through the 1990s, from around 20 percent in 1991/92 to 25 percent in 2000/01. During the same period, private investment remained stagnant, rising initially as the economy recovered from the crisis, but then falling since 1998/99. Although a definitive conclusion can only be reached with more analysis, it is possible that the major part of the increase in private savings during this period was used to finance the increase in the fiscal deficit, resulting in crowding out of private investment. As Acharya (2001) puts it: “It is quite uncanny how the deterioration of 3 percentage points of GDP in the consolidated revenue deficit between 1995/96 and 1999/00 is reflected almost exactly in the worsening of aggregate savings and investment ratios over the period. It would be hard to find more telling presumptive evidence of the adverse impact of fiscal deficits on savings and investment.”

Table III.2.Savings, Investment and the Current Account Balance, 1990/91–2000/01
1990/911991/921992/931993/941994/951995/961996/971997/981998/991999/002000/01
Gross domestic saving23.122.021.822.524.825.123.223.121.723.223.4
Private22.020.120.221.923.223.121.521.822.724.125.0
Public1.12.01.60.61.72.01.71.3−1.0−0.9−1.7
Gross investment26.322.623.623.126.026.924.524.622.724.324.0
Private17.013.715.114.817.319.217.518.016.117.216.9
Public9.38.88.68.28.77.77.06.66.67.17.1
Current Account−3.2−0.4−1.2−0.4−1.0−1.7−1.2−1.3−1.0−1.1−0.6

C. India’s Fiscal Situation in an International Context Revenue

10. Tax and total general government revenue relative to GDP in India are low by international standards as shown in Figure III.3.9 Both tax revenue and total revenue (relative to GDP) are significantly below the unweighted average of all countries for which data is available (Table III.3). While total revenue to GDP in India is well below the average, non-tax revenue is similar to the average over the decade. As for the broad categories of taxes, the ratio of taxes on income and profits relative to GDP are much lower and trade (import) related taxes are considerably higher in India compared to the respective averages. Moreover, the ratio of tax revenue to GDP in India has declined over the decade, while the average has increased slightly.

Table III.3a.General Government: Tax Structure for Non-OECD Countries, 1990–94

(In percent of GDP)

Taxes on Income, Profits, and Capital GainsDomestic Taxes on Goods and ServicesInternational Trade Taxes
of which:
SocialGeneral Sales,Of which:
SampleTotalTaxOtherOf which:SecurityPayrollTurnover orImportExport
SizeRevenueRevenueRevenueTotalIndividualCorporateTaxesTaxesTotalVATExcisesTotaldutiesduties
Argentina1990–9421.019.12.02.51.91.05.33.72.41.21.10.50.2
Brazil1990–9440.226.313.93.9021.17.31.212.41.62.40.50.50.0
Bulgaria1990–9446.436.410.014.75.27.99.71.08.33.73.72.11.7
Chile1992–9424.620.54.14.21.511.18.51.92.2
India1990–9419.414.94.52.31.11.28.90.14.03.13.00.0
Israel1990–9441.334.47.013.810.12.32.81.013.411.61.40.50.4
Malaysia1991–9433.020.912.09.22.36.80.36.02.12.14.02.91.1
Romania1990–9436.632.44.210.35.3489.55.18.46.81.61.11.1
Russia199435632.23.410.90.02.87.59.64.60.73.10.40.5
South Africa1990–9428.524.83.812.88.93.60.40.0895.82.80.80.7
Thailand1990–9419.417.61.85.01.83.10.28.33.53.73.43.40.0
Unweighted average 1/30.125.84.27.73.53.15.81.39.25.22.52.51.70.3
Table III.3b.General Government: Tax Structure for Non-OECD Countries, 1995–99

(In percent of GDP)

Taxes on Income, Profits,Domestic Taxes on Goods and ServicesInternational Trade Taxes
and Capital Gainsof which:
SocialGeneral SalesOf which:
SampleTotalTaxOtherOf which:SecurityPayrollturnover orImportExport
SizeRevenueRevenueRevenueTotalIndividualCorporateTaxesTaxesTotalVATExcisesTotaldutiesduties
Argentina1995–9822420.32.04.02.71.24.05.43.71.60.90.80.0
Brazil199737.029.08.03.90.31.58.71.212.72.11.90.60.60.0
Bulgaria1995–9938.429.88.79.04.33.67.40.810.07.42.52.11.80.0
Chile1995–9924.820.6424.11.411.48.52.11.9
India1995–9718.814.54.32.71.31.48.00.03.32.92.90.0
Israel1995–9644.536.97.715.010.72.94.31.113.411.61.50.30.3
Malaysia1995–9728.220.08.18.82.56.20.36.42.12.32.92.50.5
Romania1995–9731.227.43.88.24.33.87.5695.71.11.61.6
Russia995, 1998–9933.830.03.88.02.62.06.910.54.81.81.70.90.6
South Africa1995–9930.126.23.913.99.53.40.59.05.82.90.80.8
Thailand1995–9819.317.32.05.62.33.20.28.63.83.62.42.30.0
Unweighted average 1/30.726.24.66.73.72.46.10.910.16.22.41.61.40.3
Sources: IMF Fiscal Affairs Department (FAD) Revenue Database; Government Finance. Statistics (IMF); and International Financial Statistics (IMF).
Table III.4.Consolidated Central Government: Total Tax Revenue Selected Asian Countries

(In percent of GDP)

AverageAverage
1990–941995–99
China. P. R.: Mainland 1/3.95.4
India9.79.1
Indonesia16.015.7
Malaysia20.019.5
Philippines 1/15.216.0
Singapore16.716.0
Sri Lanka 1/18.016.0
Thailand16.715.7
Unweighted average14.614.7
(All available Asia)
Sources: GFS, IPS: and WEO.

Figure III.3.Selected Non-OECD Countries: General Government Total Revenue and Tax Revenue, 1990–99

Source: Fiscal Affairs Department (IMF) Revenue Database based on GFS and IFS (IMF): the 1990–94 and 1995–99 averages are based on data available for respective periods.

11. Asian countries generally have lower tax and total revenue to GDP ratios. Looking at a larger sample of countries for which consolidated central government data is available, and categorizing countries into groups according to region10, Asia-Pacific countries generally have a lower total revenue and tax revenue to GDP ratio than the average for all regions (Figure III.4).

Figure III.4.

Non-OECD Countries: Central Government Revenue, 1990–99

Citation: 2002, 193; 10.5089/9781451818567.002.A003

Source: Government Finance Statistics (IMF), International Financial Statistics (IMF), World Economic Outlook (IMF).

12 India’s revenue to GDP ratio is low, even compared with Asian countries. The average central government tax to GDP ratio for around 30 Asia-Pacific countries was just over 14½ percent during the 1990s. In contrast, India’s central government tax revenue (before transfers to the states) averaged 9¾ percent in the first half of 1990s, but declined to just over 9 percent in the second half the decade.11 India’s revenue from taxes on international trade in the first half of the 1990s was around 3 percent of GDP, compared to the average for available Asian countries—excluding Pacific Island countries—of 2.6 percent (Table III.5). The gap has widened in the second half of the 1990s to 2.8 percent and 2 percent of GDP, respectively.

Table III.5a.Consolidated Central Government Tax Structure for Non-OECD Asian Countries, 1990.

(In percent of GDP)

Domestic Taxes on

Goods and Services
International Trade Taxes
Taxes on Income. Profits.

and Capital Gains
Of which
SocialGeneral sales.Of which
SampleTotalTaxOtherOf which:SecurityPayrollturnover orImportExport
SizeRevenueRevenueRevenueTotalIndividualCorporateTaxesTaxesTotalVATExcisesTolaldutiesduties
Bhutan1990–9419.75414.31.60.41.20.00.03.50.92.20.20.20.0
China, P R.: Mainland 1/1990–945.1391.21.51.50.00.01.51.00.50.80.8
India1990–9412.99.73.22.31.11.20.00.04.20.14.03.13.00.0
Indonesia1990–9417.816.01.89.61.28.20.10.04.83.90.81.01.00.0
Malaysia1990–9427.420.07.49.02.36.70.20.05.72.12.14.12.91.3
Mongolia1992–9422.019.53.08.48.42.10.05.82.03.3323.20.0
Myaiimar1990–948.55.23.41.41.40.00.02.51.70.01.21.2
Nepal1990–948.77.01.70.80.60.20.00.03.31.90.92.52.40.1
Philippines 1/1990–9417.815.22.75.01.8220.00.04.71.62.24.84.70.0
Singapore1990–9433.816.717.17.50.00.04.70.31.00.50.5
Sri Lanka 1/1990–9420.118.02.12.61.01.60.00.09.75.82.64.94.60.3
Thailand1990–9418.416.71.7501.83.10.20.07.53.53.73.43.40.0
Vietnam 1/199422.918.34.64.00.23.80.00.06.13.41.65.65.6
Unweighted average 2/18.113.24.94.51.23.40.20.04.92.21.92.72.60.2
Table III.5b.Consolidated Central Government: Tax Structure for Non-OECD Asian Countries, 1995–99

(In percent of GDP)

Domestic Taxes on

Goods and Services
International Trade Taxes
Taxes on Income. Profits.

and Capital Gains
Of which
SocialGeneral sales.Of which
SampleTotalTaxOtherOf which:SecurityPayrollturnover orImportExport
SizeRevenueRevenueRevenueTotalIndividualCorporateTaxesTaxesTotalVATExcisesTolaldutiesduties
Bhutan1995–9818.26.811.43.40.62.80.00.03.01.21.50.30.20.1
China, P R Mainland 1/1995–985.85.40.30.60.60.00.04.33.31.00.40.4
India1995–9912.89.13.42.81.31.40.00.03.40.03.22.82.70.0
Indonesia1995–9917.615.71.89.64.54.90.60.04.83.60.80.60.50.1
Malaysia1995–9724.019.54.58.82.56.20.30.06.22.12.32.92.50.5
Mongolia1995–9921.115.06.14.04.03.80.05.93.41.91.21.10.2
Myanmar1995–987.13.93.21.51.30.00.01.91.30.00.70.7
Nepal1995–9910.58.71.81.40.40.90.00.13.92.50.82.92.90.1
Philippines 1/1995–9918.116.02.06.42.52.70.00.04.91.82.23.93.90.0
Singapore1995–9836.116.020.06.90.00.04.81.50.70.30.3
Sri Lanka 1/1995–9918.616.02.52.41.01.50.00.09.84.53.03.03.00.0
Thailand1995–9917.615.71.95.42.33.00.30.07.63.73.62.20.0
Vietnam 1/1995–9920.217.23.03.90.43.50.00.06.33.81.54.94.7
Unweighted average 2/17.512.74.84.41.72.90.40.05.12.51.77.01.90.1
Sources Government Finance Statistics (IMF), International Financial Statistics (IMF); and World Economic Outlook (IMF)

Expenditure

13. General government expenditure relative to GDP in India is above the average for the Asia12 although it is roughly in line with the sample. The composition of public expenditure has shifted toward consumption from investment, with potentially adverse effects on infrastructure and growth. Table III.6 shows that public consumption expenditure relative to GDP in India has been somewhat larger than the average for Asian countries. In contrast, the public sector gross fixed capital formation to GDP ratio is below the average for the Asian countries and has declined over the decade.

Table III.6.Public Expenditure, Investment and Consumption.

(In percent of GDP)

General Government, Total Expenditure and Net LendingGross Public Fixed Capital FormationPublic Consumption Expenditure
AverageAverageAverageAverageAverageAverageAverageAverageAverage
1992–19941995–19992000–011992–19941995–19992000–011992–19941995–19992000–01
Argentina22.426.128.91.61.61.213.212.814.6
Brazil28.838.438.83.42.32.217.518.919.6
Bulgaria45.839.541.02.12.33.518.814.117.5
Chile19.520.323.64.24.63.79.910.711.8
China15.814.919.713.011.913.3
Colombia22.927.231.19.17.25.914.819.321.3
India26.125.628.28.46.96.711.211.513.4
Indonesia17.116.724.44.18.66.97.3
Malaysia29.525.729.213.611.514.012.611.011.4
Pakistan25.123.421.88.76.75.512.511.510.6
Romania36.834.634.61.71.81.513.914.116.1
Russia49.039.933.418.011.17.717.919.013.3
South Africa36.831.027.92.62.62.420.118.818.1
Thailand15.817.918.18.29.97.99.910.511.5
Turkey26.525.926.86.45.25.412.111.511.2
Vietnam25.823.725.96.46.46.27.57.98.3
Unweighted Average27.726.928.46.75.75.213.313.213.7
Unweighted Asia Average22.221.123.99.18.37.410.810.210.8
Source: IMF WEO Database.

Deficits and Debt

14. India has consistently run overall and primary deficits which are high by international standards. While India’s general government expenditure is comparable to the sample average, its total revenue ratio is much lower—resulting in relatively large and persistent deficits. Table III.7 highlights the increasing trend in the deficit for India. The sample of Asian countries have a much lower average deficit over the 1990s compared to India (and the full sample), but the deficits have increased significantly in recent years—reflecting the expansionary fiscal stances adopted in the aftermath of the Asian crisis. India’s general government primary deficit is relatively large and has grown substantially in recent years. The trend has generally been one of fiscal consolidation, with the average of primary deficits going from a small negative in the first half of the 1990s (1992–94), to near balance in the second half of the 1990s, and surplus in recent years. In contrast, India’s primary deficit has remained relatively large and negative and the primary deficit has worryingly doubled in recent years (see Section E).

Table III.7.General Government Deficits and Debt, 1992–2001

(In percent of GDP)

General Government BalanceGeneral Government Primary BalancceGeneral Government, Net Debt
AverageAverageAverageAverageAverageAverageAverageAverageAverage
1992–19941995–19992000–011992–19941995–19992000–011992–19941995–19992000–01
Argentina−0.5−2.84.60.8−0.3−0.233.541.054.7
Brazil−1.7−7.4−4.91.80.53.633.038.953.8
Bulgaria−7.3−3.7−1.02.56.63.6
Chile2.01.1−0.93.21.6−0.6
China−2.3−2.5−3.5−1.9−1.8−2.66.19.518.0
Colombia−0.4−3.1−4.31.8−0.8−0.2
India-7.6-7.9-10.3-2.6-2.7-4.276.168.578.7
Indonesia−0.6−0.7−3.61.51.62.0
Malaysia141.0−4.4
Pakistan−7.4−7.0−4.3−1.9−0.22.791.588.693.4
Romania−2.4−4.5−3.7−1.5−1.10.8
Russia−12.1−5.93.5−10.6−1.66.0
South Africa−7.9−3.8−1.1−2.62.15.9
Thailand2.1−0.3−2.8
Turkey−7.1−10.1−19.8−3.73.84.047.576.7
Vietnam−4.3−2.3−4.4−2.9−1.5−3.5
Unweighted Average−3.5−3.7−4.4−1.20.41.348.049.062.5
Unweighted Asia Average−2.7−2.8−4.8−1.6−0.9−1.157.955.563.4
Source: IMF WEO Database.

15. India’s debt to GDP is high by international standards and the ratio has grown in recent years (Table III. 7). The legacy of continuous primary and overall deficits has been the buildup in the debt stock. A notable observation is that the actual debt to GDP ratio for India is higher than that of countries that have recently undergone financial crises (namely, Brazil, Argentina and Turkey)—although India’s external debt to GDP ratio is relatively low compared to these countries (see Box III.1).

D. Lessons from Countries Experiencing Successful Fiscal Adjustment13

16. There is an ongoing debate in India about the impact of fiscal consolidation on economic activity, especially during the more recent period when the economic downturn has led to calls for pump priming. Many commentators argue that large and persistent fiscal imbalances have a detrimental effect on activity, and therefore fiscal consolidation would likely have a strong positive effect on growth. The fact that India’s strong growth performance in the early to mid-1990s was concurrent with substantial fiscal consolidation (as well as a host of other reforms) is used to support this argument—referred to as “expansionary fiscal consolidation” in the literature. Others take the more traditional Keynesian view that fiscal expansion has a positive multiplier effect on aggregate demand and output.

17. The arguments for expansionary fiscal consolidation are particularly applicable to countries with large public debt and deficits, like India. This is because, when public debt and deficits are large, fiscal expansion can add to crowding out as agents expect that increases in interest rates (or initial exchange rate appreciation) could become larger or that risk premia on interest rates (related to risks of default or increasing inflation) could increase. Furthermore, when public debt and deficits are large, fiscal consolidation could provide a significant boost to confidence in policy-making and thus prove expansionary.14

Box III.1.India, Argentina, Brazil and Turkey: Comparison of Key Fiscal Indicators

In assessing India’s fiscal situation, it is instructive to compare key fiscal indicators with those of other major emerging market countries that have recently experienced financial crises.

India has persistently run primary deficits, unlike Argentina, Brazil and Turkey, which have over the last decade, generally maintained primary surpluses both at the central government and overall public sector level. India has run public sector primary deficits averaging nearly 4 percent of GDP.

General government tax revenue relative to GDP in India is relatively low. The average ratio for 1995–99 has been 14½ percent, compared to around 20 percent in Argentina, and 30 percent in Brazil.

The ratio of the stock of public sector debt to GDP is higher in India than in Argentina or Brazil. Total public sector debt relative to GDP in India is much greater than in Argentina and Brazil, while the ratio for Turkey recently shot up (during the crisis) to around that of India. The difference in public sector debt stocks may in part be due to the fact that privatization of the large utilities and other large stale enterprises has not yet been undertaken in India.

The essential ingredients for explosive debt dynamics are present for India—large primary deficits, slowing growth, and a growing debt stock (Figure III.5).

On the positive side, India’s external debt is relatively low, particularly compared with Argentina and recently, Turkey. Also, there is scope to increase government revenue (relative to GDP) towards the Argentina-Brazil-Turkey level (particularly as services come under the tax net); and for reducing public sector debt using revenues from privatization.

Source: WEO database and IMF country desk data (2001 data are provisional or staff estimates)

1/ India data are in fiscal years ending March (e.g. 1999 relates to April 1999-March 2000)

18. What is the evidence from the empirical literature on expansionary fiscal contractions The majority of the empirical work on this question has focused on OECD countries and was spurred by the experiences of Denmark and Ireland, where sharp fiscal consolidations were associated with sizable economic expansions. Typically, fiscal consolidations are defined as some threshold reduction in the structural primary deficit to GDP ratio (over a period ranging from 1–3 years). The “success” of these fiscal consolidations is measured by the size and duration of the fiscal adjustment or its impact on the debt-to-GDP ratio.

19. The main findings of these studies include the following:

  • Regardless of the definitions used, all studies find episodes of expansionary fiscal contractions.

  • Empirical studies place different emphasis on the composition of fiscal contractions.15 While both size and composition are important (McDermott and Westcott, 1996), some emphasize the importance of large consolidations (Giavazzi and Pagano, 1996; Giavazzi et al. 2000), while others highlight the importance of the composition of the adjustment (e.g., cutting transfers and other unproductive spending versus raising taxes or cutting capital spending).

  • Initial conditions at the time of the fiscal adjustment and other economic policies accompanying the adjustment matter in determining the success of the consolidation effort. Alesina and Ardagna (1998) found that successful adjustments were associated with initial conditions of relatively large debt-to-GDP ratios, and were largely on the expenditure side, especially through cuts in current spending such as transfers and government wages (see Box III.2).

Box III.2.Some Successful Fiscal Consolidations1/

The Alesina and Ardagna (1998) case studies comprise five expansionary fiscal contractions—Australia (1987), Belgium (1984–85), Denmark (1983–86), Ireland (1987–89), and Italy (1993)—and five contractionary contractions—Canada (1986–87), Greece (1986–87), Ireland (1983–84), the Netherlands (1991), and Sweden (1986–87). The table below summarizes the relevant fiscal and growth data for the successful consolidations (while Alesina and Ardagna (1998) provide descriptions of the circumstances leading up to the consolidation, its composition, accompanying policies, and the economic responses). Comparing the expansionary and contractionary consolidation outcomes suggests the following conclusions.

  • Expansionary fiscal contractions emphasize expenditure reductions. Cuts in transfers and government wages are especially important. Australia provides the clearest illustration of this. But the fiscal consolidation in Italy was associated with higher growth only after there was a shift from tax-based to expenditure-based adjustment. While Denmark successfully combined expenditure cuts with tax increases.

  • The initial debt position matters. Of the five expansionary fiscal contractions, fiscal adjustment was intended to reduce a debt ratio in excess of 100 percent in three cases, Belgium, Ireland, and Italy. There was also debt concern in Denmark, although the debt ratio was much lower, at about 60 percent (but rising quickly). Australia, however, had very low debt.

  • Wage restraint plays a role in determining the success or failure of fiscal adjustment. In Australia, Ireland, and Italy, unions agreed to moderate wage claims. In the case of Belgium, a wage agreement in place prior to the fiscal adjustment was abandoned while wage restraint agreed to in Denmark did not carry over to the period following the adjustment. In Belgium, the growth pick up was weak, and in Denmark, it was shortlived. Wage restraint was not a feature of any of the contractionary fiscal contractions, although the Netherlands subsequently introduced a wage freeze.

  • Finally, exchange rate depreciations have been important. Four of the five expansionary fiscal contractions followed (within about a year) exchange rate depreciations, which combined with wage restraint to reduce relative until labor costs and improve competitiveness. And even in the case of Belgium, there was a depreciation two years before fiscal consolidation commenced.

Expansionary Fiscal Consolidations
Primary Structural Balance 1/Growth Rate
IIIIIIIIIIII
Expansionary fiscal contractions
Australia (1987)−2.50.41.33.44.64.4
Belgium (1984–85)−4.0−0.11.61.01.51.7
Denmark (1983–86)−5.40.24.21.13.70.7
Ireland (1987–89)−5.8−0.12.10.85.85.7
Italy (1993)−0.21.31.61.0−1.22.5
Source: Alesina and Ardagna (1998).

I - Average for the two years before the adjustment

II - Average for the adjustment period, and

III - Average for the two years after the adjustment

1/ This box is drawn from IMF (2000, Annex 1).

20. The political economy aspects of the fiscal adjustment literature are also worth mentioning. Alesina and Perotti (1995) suggest that large and persistent deficits may suggest a deficit bias explained by several political economy factors such as: fiscal illusion (i.e., voters and policymakers may not be fully aware of the government’s intertemporal budget constraint); a willingness to shift the burden of adjustment onto future generations; and delays in consolidation resulting from political conflicts regarding the sharing of adjustment costs between various groups. Alesina et al. (1998), using a sample of 19 OECD countries, find no evidence of systematic electoral penalty or decline in popularity for fiscally prudent governments. They also find that a coalition government is much less likely to succeed in consolidating the budget than a single party government; governments that rely on spending cuts may survive longer; cuts in the government wage bill and transfers do not increase the probability that a government will collapse; and popularity of a government does not fall in the immediate aftermath of a fiscal adjustment.

21. There is little direct work on expansionary fiscal consolidations in developing countries. However, it is possible to use the evidence above to glean some lessons that may be relevant for India. The most likely channels for possible expansionary fiscal consolidation effects in India are (i) the reduction in the risk premia and improvement in investor perceptions and the associated positive investment and growth effects, and (ii) a reduction in unproductive recurrent expenditures or a shift from such expenditures to productive infrastructure spending. From the theoretical side, Ricardian equivalence effects are less likely to be relevant to developing countries as these models assume consumers do not face a liquidity constraint.16 The labor supply channel (Alesina and Perotti, 1997; Lane and Perotti, 1998) might also be less relevant to developing countries because it relies on functioning, sophisticated labor markets.

E. Debt, Sustainability and Consolidation

22. The view that the fiscal situation in India is unsustainable is generally acknowledged by policymakers and analysts. Recent important government papers such as the Economic Survey and various RBI reports have stressed this point, and the Finance Minister has, on various occasions following the announcement of the last budget, echoed this point. Most importantly, the efforts to establish a depoliticized, rules-based framework to underpin fiscal consolidation attempts gave rise to the drafting of the Fiscal Responsibility and Budget Management (FRBM) bill.

23. The sustainability of the fiscal situation in India has been extensively analyzed.17 As recent and fairly detailed studies of India’s debt sustainability have been undertaken by the IMF (Cashin, 2001; Reynolds, 2001) using a variety of methods, the focus here is on key recent developments which further weaken the conditions for sustainability.18

24. A simplified formulation of the dynamic relationship between debt, growth, and interest rates helps demonstrate the key conditions for sustainability. Assuming a constant nominal GDP growth rate of g, and an nominal interest rate of r on government debt, the debt-to-GDP ratio (d) evolves according to the formula: dt+1 = dt(l+r)/(l+g) + pt+1; where p is the primary deficit (including seignorage revenue). Thus, if the primary deficit is zero, then increases or decreases in the debt ratio are determined by whether the growth-interest rate differential (g-r) is negative or positive. In the case of India, historically, the growth rate has been consistently higher than the real interest rate (Reynolds, 2001). However, the primary deficits have offset the growth-interest differential such that the decreases in the debt ratio in the mid-1990s were not as large as the might have been. In the second half of the 1990s, the higher primary deficits more than outweighed the growth-interest rate differential, resulting in an increasing debt ratio.

25. The conditions for debt sustainability have significantly worsened in recent years. The general government primary deficit has more than doubled since 1997/98, the debt stock has risen sharply and the growth rate-interest rate differential has narrowed (even turning negative in recent years—see Figure III.5). These conditions demonstrate the urgency of the need to reduce primary deficits.

Figure III.5.

India: Key Indicators of Fiscal Sustainability, 1991/92–2001/02

Citation: 2002, 193; 10.5089/9781451818567.002.A003

26. Within the simple debt dynamics framework, and assuming various nominal growth rates and interest rates on government debt, two adjustment scenarios are considered.19 The scenarios assume that the objective is to achieve the draft fiscal responsibility bill’s target for central government debt of 50 percent of GDP or less by 2011.20 2001/02 is taken as the base year, with the debt ratio starting at 80 percent of GDP, an average interest rate on government debt of 8¾ percent and a nominal GDP growth rate of 11 percent.

  • The first scenario achieves the target debt ratio following an even pace of adjustment. The general government primary deficit would need to be reduced by about 1.3 percent a year for around 5 years, although this path would still imply an initial increase in the debt stock for the first two years.

  • The second scenario assumes immediate stabilization of the debt ratio. The rationale for this path is suggested by the experience of countries that have undertaken successful consolidations (as discussed above)—where a large fiscal adjustment can generate positive effects the demand and supply side that can partly or wholly offset the negative Keynesian effect. Again using the base assumptions, debt stabilization implies an initial reduction in the primary deficit of 2.4 percent of GDP, after which a more gradual adjustment path can be pursued to achieve the debt ratio target.

Reduction in Primary Structural Balance of General Government Needed to Stabilize the General Government Debt Ratio by 2002/03
Steady State Nominal GDP Growth
7.510.914.3
Steady state8.34.62.1−0.2
Nominal interest8.74.92.40.1
On Govt debt9.05.12.70.3

27. Simulations were also undertaken using the base assumptions on GDP growth and interest rates plus or minus 1½ standard deviations. For the baseline average interest rate on government debt (8.7 percent), nominal growth would have to exceed 14 percent in order to stabilize the debt ratio without adjusting the primary deficit. If however, for the baseline interest rate, nominal GDP growth were to fall to 7½ percent, then the burden of adjustment on the primary deficit would increase to nearly 5 percent. (The average interest rates is unlikely to change dramatically from year to year because of the persistence implied by the maturity structure of government debt, although the recent cuts in administered interest rates could help to reduce average rates over time).

28. This assessment of debt sustainability excludes contingent liabilities. There are no official estimates of total contingent liabilities in India. For the purposes of this analysis, contingent liabilities are taken as including central and state government guarantees, arrears in payments to the power utilities from state electricity boards, and staff estimates of the financial sector recapitalization need. These would total around 17–20 percent of GDP. If estimates of the unfunded pension liabilities are included, contingent liabilities could be as high as 50 percent of GDP. Including the estimated contingent liabilities in the assessment of sustainability, clearly worsens the picture considerably.

29. In pursuing fiscal consolidation, the adjustment strategy should focus on raising the revenue to GDP ratio in India. There is significant scope for broadening the direct tax base given agriculture and services (¾ of the economy) remain largely untaxed. Using the average of central government revenue to GDP in Asian countries as a benchmark, there is the potential to increase tax revenue by around 3–5 percent of GDP. Improved administration could help in the effort to raise revenue and broaden the tax base—the size of the middle classes in India are thought to be well over 100 million (Joshi, 1998), compared to the total registered tax payers of around a quarter that number. In this context, large taxpayers units have been found to be effective in improving administration and increasing revenue in a broad range of developing, emerging and industrialized countries.21

30. There are potential efficiency gains and revenue benefits from rationalizing direct and indirect taxes. For example, phasing-out of tariff concessions, including those available under export-promotion and other incentives schemes; reducing excise exemptions, especially on small scale industries (SSls) and fertilizer; reducing scope for corporate income tax deductions, phasing out of concessions to SSIs, and more generally more selective use of tax incentives, could increase revenues by more than 1 percent of GDP in the short-term alone.

31. On the expenditure side, the focus should be on reducing unproductive and poorly targeted expenditures, while maintaining adequate investment in infrastructure and human capital. The reports of the Expenditure Reforms Commission (ERC) already provide a blueprint for reducing subsidies and civil service reforms—so the key now is implementation. The ERC was constituted following the Budget Speech in February, 2000, to make recommendations on central government expenditure reforms—in particular with regard to improving the targeting and cost of subsidies and streamlining and downsizing the structure of government.22

F. Conclusions

32. India’s fiscal situation is unsustainable—as the government well recognizes—and concerted effort to substantially reduce fiscal deficits is required. Increasing deficits, a growing debt stock and a narrowing of the growth-interest rate differential imply that the conditions for fiscal sustainability have further worsened. The current level of the primary deficit, if left unchecked, implies a growing and unsustainable debt stock. The simulations presented in this chapter illustrate that an annual reduction in the consolidated general government primary deficit of 1⅓ percent of GDP for the next five years will be necessary to reduce general government debt to 60 percent of GDP by 2011. A case could be made for an even larger upfront reduction in the primary deficit, particularly if it were combined with an intensification of structural reforms. By boosting sentiment and hence private investment, such a policy package could give rise to sizable early gains in output that served to offset any negative Keynesian effects from the fiscal contraction.

33. The difficult problem, of course, is how to effect such a fiscal adjustment. This chapter attempts to answer this question in two different ways. First, it identifies the particular revenue and expenditure items that were behind the increase in the fiscal deficit in the second half of the 1990s, since these are obvious candidates to assist in reversing this trend. Second, it uses international comparisons to show that India’s revenue to GDP ratio is particularly low. Thus while reductions in the public sector wage bill, inefficient expenditure and government subsidies are essential, the key challenge appears to be on the revenue side—to get agriculture into the tax net, to increase the taxation of services, and to raise the number of tax payers, particularly high income tax payers.

34. As in other countries, many groups in India, will oppose deficit reduction, but the literature on the political economy of fiscal adjustment provides some grounds for optimism. While that literature indicates that consolidation may be more difficult to pursue for a coalition government, as is in power in India, there is no evidence of a systematic electoral penalty or decline in popularity for fiscally prudent governments.

35. The need for ensuring corrective action in a “depoliticized” framework of fiscal rules prompted the push for Fiscal Responsibility legislation. The draft legislation specified target rates for reduction of the central government deficit and revenue deficit, and a target debt to GDP ratio.23 Whatever form the bill eventually takes, it will be important that its medium term objective is to achieve a sustainable fiscal situation. This will be difficult to achieve unless two essential features of the draft bill—committing to a rules based reduction in deficits and the ultimate target of a zero revenue (current) balance—are retained in the final legislation.

References

    Acharya, Shankar,2001, “India’s Macroeconomic Management in the Nineties,unpublished, (New Delhi: ICRIER).

    Ahluwalia, Montek S.,2002, “India’s Vulnerability to External Crisis: An Assessment,” In Macroeconomics and Monetary Policy: Issues for a Reforming Economy Essays in Honor of C. Rangarajan, eds.MontekAhluwalia, S.S.Tarapore and Y. V.Reddy,Oxford University Press (forthcoming).

    Alesina, Alberto and SilviaArdagna,1998, “Tales of Fiscal Adjustment,Economic Policy: A European Forum, Vol. 27 (October), pp. 487546.

    Alesina, Alberto, and RobertoPerotti,1995, “The Political Economy of Budget DeficitsStaff Papers, International Monetary Fund, Vol. 42, (March), pp. 131.

    Alesina, Alberto, and RobertoPerotti,1997, “Fiscal Adjustments in OECD Countries: Composition and Macroeconomic Effects,IMF Working Paper 96/70.

    Alesina, Alberto, and RobertoPerotti, and JoséTavares,1998, “The Political Economy of Fiscal Adjustments,Brookings Papers on Economic Activity, No. 1, Brookings Institution, pp. 197266.

    Barro, Robert J.,1974, “Are Government Bonds Net Wealth?Journal of Political Economy, Vol. 82 (November/December), pp. 10951117.

    Buiter, W., and U.Patel, (1992), “Debt, Deficits, and Inflation: An Applications to the Public Finances of India,Journal of Public Economics, No. 47, p. 171205.

    Callen, Tim, PatriciaReynolds, and ChristopherTowe, (eds.), 2001, “India at the Crossroads-Sustaining Growth and Reducing Poverty” (Washington: International Monetary Fund).

    Cashin, P., N.Olekalns, and R.Sahay,2001, “Tax Smoothing, Financial Repression, and Fiscal Deficits in India,” in Callen, Patricia Reynolds, and ChristopherTowe, (eds.), pp. 5374.

    Chopra, Ajai, CharlesCollins, RichardHemming, and KarenParker,1995, “India: Economic Reform and Growth,” IMF Occasional Paper 134.

    Giavazzi, Francesco, TullioJappelli, and MarcoPagano,2000, “Searching for Non-Linear Effects of Fiscal Policy: Evidence from Industrial and Developing Countries,NBER Working Paper No. 7460 (Cambridge, Massachusetts: National Bureau of Economic Research).

    GiavazziFrancesco, and MarcoPagano,1996, “Non-Keynesian Effects of Fiscal Policy Changes: International Evidence and the Swedish Experience,Swedish Economic Policy Review, Vol. 3 (Spring), pp. 67103.

    Government of India, Economic Survey 2000/01 and 2001/02.

    Government of India, Planning Commission, 2001, Report of the Advisory Group on Tax Policy and Tax Administration for the Tenth Plan, Chairman: Parthasarathi Shome.

    Haque, Nadeem, Ul, and Peter J.Montiel,1989, “Consumption in Developing Countries: Test for Liquidity Constraints and Finite Horizons,Review of Economics and Statistics, Vol.71 (August), pp. 49815.

    International Monetary Fund, 2000, “The Effectiveness of Fiscal Policy in Stimulating Economic Activity—A Review of the Literature,IMF Board Paper, SM/00/66.

    Joshi, V.,1998, “Fiscal Stabilization and Economic Reform in India”, in India’s Economic Reforms and Development—Essays for Manmohan Singh, Eds.I.Ahluwalia and I.M.D.Little,Oxford University Press.

    Krugman, Paul R., and MauriceObstfeld,1997, International Economics: Theory and Policy (Readings, Massachusetts: Addison-Wesley, 4thed.).

    Lahiri, Ashok, and R.Kannan,2001, “India’s Fiscal Deficits and Their Sustainability in Perspective,Paper presented at World Bank NIPFP Seminar of Fiscal Policies for Growth.

    Lane, Phillip R., and RobertoPerotti,1996, “Profitability, Fiscal Policy, and Exchange Rate Regimes,CEPR Discussion Paper No. 1449 (London: Centre for Economic Policy Research).

    Lucas, Robert E.Jr.,1988, “On the Mechanics of Economic Development: W. A. Mackintosh Lecture, 1985,Journal of Monetary Economics, Vol. 22, (July), pp. 342.

    McDermott, C. John, and Robert F.Wescott,1996, “An Empirical Analysis of Fiscal Adjustments,Staff Papers, International Monetary Fund, Vol. 43 (December), pp. 72553.

    Muhlesien, M.,1997, “Improving India’s Saving Performance,IMF Working Paper No. WP/97/4.

    Reserve Bank Of India, 2002, “Report on Currency and Finance 2000-01,” (Mumbai).

    Reynolds, P (2001), “Fiscal Adjustment and Growth Prospects in India,” in Callen et al. (2001)

    Shome, P.,2000, “India: Primary Aspects of a Medium Term Fiscal Strategy,” (New Delhi: ICRIER).

    Srinivasan, T. N.,2000, “India’s Fiscal Situation: Is a Crisis Ahead?unpublished, Yale University.

    Tzanninis, Dimitri,1996, “Controlling Central Government Expenditure,” in India—Selected Issues, IMF Staff Country Paper.

    Tzanninis, Dimitri,, 1997, “The States’ Fiscal Problem,” in India’ Selected Issues, (September)IMF Staff Country Paper.

Prepared by Yougesh Khatri (x35494), who is available to answer questions.

Recent IMF studies include, Chopra et al. (1995), Tzanninis (1996, 1997), Muhleisen (1997, 1998), Cashin et al. (1998), Reynolds (2001), and Callen et al. (2001). Other studies include Buiter and Patel (1992), Joshi (1998), Srinivasan (2000), Shome (2000), Acharya (2001), and Ahluwalia (2002).

The adjustment program included monetary tightening, fiscal consolidation, a sharp devaluation of the rupee, and structural reforms including trade liberalization, tax reform, and financial sector reform.

The fiscal year in India runs from April to March. The authorities’ definition of general government includes central government and states governments, and treats privatization receipts as revenues above-the-line. Staffs’ definition of general government (reported here) also includes the oil pool account balance and treats privatization receipts below-the-line as financing items.

Pay scales for central government civil servants are determined on the basis of recommendations of the Pay Commission, a constitutionally mandated body that is established about every 10 years. The Fifth Pay Commission report of January 1997 recommended a threefold increase in basic pay scales and downsizing by 30 percent in each governmental department and agency. While state governments are not obligated to adopt the Pay Commission recommendations, in practice they have tended to follow central government pay revisions with a lag of about one year. See Shome (2000) for a more detailed discussion.

Employment by state governments increased by over a third between 1980/81 and 1997/98; and state budget subsidies increased by an average of 9 percent per annum in real terms for most of the 1980s (Tzanninis, 1997).

For a detailed discussion of tariff reforms and trade liberalization upto 1997, see Chapter IV of India—Selected Issues (IMF Staff Country Report No. 97/74, September 1997).

Acharya (2001) and Ahluwalia (2002) make the same point.

A representative sample of key emerging markets is chosen from the countries in the IMF Fiscal Affairs Department (FAD) Revenue Database, for which general government data are available. The findings are similar if all available countries are considered.

See www.imf.org for a list countries included in each regional grouping.

China’s central government revenue to GDP is lower than India’s, but it is more appropriate to compare general government revenue with that of India (as both are federal systems with a large amount of fiscal activity at the subnational government level). China’s official fiscal statistics exclude important fiscal activity—staff estimates of general government suggest that revenue exceeded 20 percent of GDP in 2000.

This observation remains valid even in the period following the Asian crisis, when many of the affected countries conducted expansionary fiscal policies to support the recovery and to reform and strengthen their financial sectors.

This section draws extensively on IMF (2000).

Supply side impacts of fiscal policy provide another potential source expansionary fiscal consolidations—typically involving labor markets (Alesina and Perotti, 1997) or investment. For example, if public expenditure on infrastructure and human capital development has positive direct and indirect effects (via externalities) on growth (Lucas, 1988), then reductions in unproductive or wasteful government expenditure (not sharing these characteristics) may also lead to higher growth.

The RBI Currency and Finance Report, 2000–01 (Chapter IV), reviews the trends in fiscal adjustment in OECD and emerging economies, focusing on the form of the adjustment (expenditure reduction rather than tax increases and efforts to strengthen fiscal frameworks).

Haque and Montiel (1989) and other studies find evidence that a high proportion of consumers in developing countries are liquidity constrained.

A brief update of the results of previous studies using a simple debt dynamics equation and an alternative test (RBI, 2002), based on the stationarity for the discounted debt stock, suggest respectively that current debt dynamics are unsustainable and the solvency conditions do not hold.

The framework here is highly simplified, but serves to demonstrate the main point. A more elaborated neoclassical growth model is employed by Reynolds (2001) and the main implications from that model are consistent with the simpler formulation presented here.

The scenarios are based on general government (including the OCC), and the authorities’ definition of the deficit (which includes privatization as revenue above the line). The draft FRBM bill’s target of 50 percent of GDP translates to a general government debt ratio of around 60 percent of GDP (assuming the current ratio of central to general government debt remains the same).

IMF Occasional Paper No. 215: Improving Large Taxpayers’ Compliance—A Review of Country Experience (May 2002) surveys around 40 countries and finds that countries may gain significant benefits from setting up special operations to control the compliance of large taxpayers. The most effective LTUs are based on strong, centralized supervision of operations, and longer-term effectiveness and credibility of the LTU depends on the government being able to incorporate the LTU in a broader tax administration reform. To work properly the LTU requires a sound legal framework; clear and simple criteria for selecting large taxpayers; standard and transparent procedures; the administration of all large taxpayers by the unit; appropriate staffing and training; and clearly identified and regularly monitored performance indicators.

The ERC has so far submitted five reports, which included recommendations to: ban the creation of new civil service posts for two years; cut 10 percent of staff by 2004/05, facilitated by a new voluntary retirement scheme and restructuring of eight departments and ministries; implement a ration card system for food subsidies at the state government level; allow greater autonomy of state governments in providing food subsidies, including through more market-oriented procurement procedures; take steps to reduce foodgrain buffer stocks in excess of 10 million tons, including by moderating increases in support prices; and decontrol the fertilizer sector and increase prices toward import parity, gradually over a period of 10 years.

The draft proposed to eliminate the central government revenue deficit (corresponding roughly to the current deficit) by 2006, to reduce the overall central government deficit by at least ¾ percent of GDP each year to 2 percent by 2006, and to reduce total central government liabilities to 50 percent of GDP by 2011.

Other Resources Citing This Publication