Publication: Policy Note on the Unfinished Fiscal Reform Agenda in Indian States
Date
2008-06
ISSN
Published
2008-06
Author(s)
World Bank
Abstract
Both central and state governments have
carried out significant correction of financial imbalances
since 2000, through the implementation of fiscal reforms
including enactment of fiscal responsibility (FR) acts.
However, the improvement in the finances of all states in
aggregate hides wide disparities between them. Some state
governments are already on a sustainable path while some
others are far from it. Some have complied with their Fiscal
Responsibility acts both in letter and spirit, while others
have accumulated off-budget liabilities to unsustainable
levels, circumventing the FR acts, which did not specify
caps on such liabilities. Moreover, fiscal correction by an
Indian state is only a means to an end. The end that is,
achievement of development goals-depends on how fiscal space
is used, or how efficiently the money is spent to produce
outputs and the desired outcomes. A strong fiscal
performance will lead both to an improvement in the overall
balance via improved structure of revenue and expenditures,
with incentives in place to ensure sustained fiscal
improvement, and better outcomes associated with budget
outlays. Note one examines progress with overall fiscal
correction by Indian states during 2000-06. Note two
presents case studies of fiscal adjustment experience in
three selected states. Finally, note three illustrates how
expenditure efficiency could be measured so as to address
the challenge of translating outlays to outcomes.
Citation
“World Bank. 2008. Policy Note on the Unfinished Fiscal Reform Agenda in Indian States. © Washington, DC. http://openknowledge.worldbank.org/entities/publication/f74017cf-87ec-55eb-acbb-2976f23193d8 License: CC BY 3.0 IGO.”