Research Catalog

Title

Fiscal Policy in India [electronic resource]: Past Reforms and Future Challenges / Richard Herd and Willi Leibfritz

Author

Herd, Richard.

Publication

Paris : OECD Publishing, 2008.

Details

Additional Authors

Leibfritz, Willi.

Description

46 p.; 21 x 29.7cm.

Summary

This paper examines varies areas of Indiaś fiscal policy, in particular fiscal discipline, the structure of government spending, the tax system and fiscal federalism. It describes reforms over the past decades which, as part of the overall economic reform agenda, helped lifting the Indian economy to a higher growth path. It also discusses where further reforms are desirable to further reduce economic distortions and improve the provision of public services. It finds that after high fiscal deficits have often been recorded during the past two decades, after the adoption of the Fiscal Responsibility and Budget Management Act in 2003, fiscal discipline has significantly improved. As to government spending, it argues that, given the large share which is used to subsidise commercial undertakings, agriculture and food distribution, there is much room to improve the quality of spending and to target it better to improving infrastructure and reducing poverty. It describes the tax system which has undergone major reforms since the early 1990s. Nonetheless, there are still many exemptions and loopholes which suggest that a broadening of the tax bases would allow further reductions in tax rates and make the system simpler, fairer and more efficient. The paper also suggests that reforms of indirect taxes should focus on creating a common market within India so that goods can move between states without border controls. Finally, on fiscal federalism it finds that India's federal structure has led to a well-developed system of tax-sharing and transfers, both through constitutionally empowered bodies and delivered through the annual budget. While overall, Indiaś fiscal federalism has worked well moving resources towards the poorest states, it has become very complex and there are still some features which weaken fiscal discipline of the states. Furthermore, a major drawback is the lack of an effective local government system, most notably in rural areas and strengthening the local level would be important for improving accountability and responsiveness to citizens' needs as three-quarters of the population live in states with over 50 million inhabitants.

Series Statement

OECD Economics Department Working Papers, 1815-1973 ; no.595

Uniform Title

OECD Economics Department Working Papers, no.595.

Subject

• Economics
• India

LCCN

10.1787/244241786035

OCLC

oecd-lib

Author

Herd, Richard.

Title

Fiscal Policy in India [electronic resource]: Past Reforms and Future Challenges / Richard Herd and Willi Leibfritz

Imprint

Paris : OECD Publishing, 2008.

Series

OECD Economics Department Working Papers, 1815-1973 ; no.595

OECD Economics Department Working Papers, 1815-1973 ; no.595.

Connect to:

Full text online available onsite at NYPL

Indexed Term

Economics

India

Added Author

Leibfritz, Willi.

Other Standard Identifier

10.1787/244241786035 doi