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India’s Experience with Fiscal Rules: An Evaluation and The Way Forward
Author:
Mr. Alejandro Simone null

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Petia Topalova null

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Series:
IMF Working Papers
Volume/Issue:
Volume 2009: Issue 175
Language:
English
Publication Date:
01 Aug 2009
DOI:
https://doi.org/10.5089/9781451873221.001
ISBN:
9781451873221
ISSN:
1018-5941
Pages:
40
Keywords:
WP; government; country; Includes; deficit; borrowing regime; government finances; state government
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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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.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund