India: Fiscal Scenario: an Overview
INDIA: FISCAL SCENARIO: AN OVERVIEW
MANJIRA DASGUPTA
As governments have assumed increasing fiscal responsibilities the world over, both government revenues and expenditures have multiplied manifold, calling into question concerns with sustainability and efficiency. Compulsions to combine the need for responsible governance and greater accountability have necessitated fiscal restraint on one hand and fulfillment of development objectives in particular in the developing country context. The present study considers some relevant issues in the context of the fiscal adjustment and correction efforts that were initiated by the Central Government at the turn of 1990s and have continued thereafter. So far as revenue mobilization efforts are concerned, India, it must be mentioned, has exerted itself considerably in augmenting revenue reserves so that scope for further fiscal consolidation specifically calls for better expenditure management efforts. Accordingly, expenditure trends in particular have been examined and the feasibility of potential correction efforts studied over the period 1980-81 to 2011-12. In view of the preponderance of expenditures that are of an obligatory nature, the conclusions seem to point at rather limited scope for substantive expenditure compression. Rather, better targeting and ensuring enhanced productivity of government expenditure seems to be the need of the hour.
INTRODUCTION
In 1991-92, India embraced wide-ranging structural adjustment and short-term stabilization programmes in tackling the erstwhile extreme crisis of internal and external macro-imbalances. Massive correction on the fiscal front formed a part and parcel of the reform package. Twenty years after the inception of the first Reform Era, the role of government has undergone a marked shift as more and more stress has been laid on fiscal management and consolidation. Both government revenues and expenditures have multiplied manifold, raising concerns with sustainability and
MANJIRA DASGUPTA
As governments have assumed increasing fiscal responsibilities the world over, both government revenues and expenditures have multiplied manifold, calling into question concerns with sustainability and efficiency. Compulsions to combine the need for responsible governance and greater accountability have necessitated fiscal restraint on one hand and fulfillment of development objectives in particular in the developing country context. The present study considers some relevant issues in the context of the fiscal adjustment and correction efforts that were initiated by the Central Government at the turn of 1990s and have continued thereafter. So far as revenue mobilization efforts are concerned, India, it must be mentioned, has exerted itself considerably in augmenting revenue reserves so that scope for further fiscal consolidation specifically calls for better expenditure management efforts. Accordingly, expenditure trends in particular have been examined and the feasibility of potential correction efforts studied over the period 1980-81 to 2011-12. In view of the preponderance of expenditures that are of an obligatory nature, the conclusions seem to point at rather limited scope for substantive expenditure compression. Rather, better targeting and ensuring enhanced productivity of government expenditure seems to be the need of the hour.
INTRODUCTION
In 1991-92, India embraced wide-ranging structural adjustment and short-term stabilization programmes in tackling the erstwhile extreme crisis of internal and external macro-imbalances. Massive correction on the fiscal front formed a part and parcel of the reform package. Twenty years after the inception of the first Reform Era, the role of government has undergone a marked shift as more and more stress has been laid on fiscal management and consolidation. Both government revenues and expenditures have multiplied manifold, raising concerns with sustainability and
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