Fiscal Policy Issues for India after the Global Financial Crisis (2008-2010)
Kumar, Rajiv; Soumya, Alamuru | September 2010
Abstract
The need for fiscal consolidation and sustainability is one of the key macroeconomic issues confronting Indian economy. This paper attempts to understand India’s current fiscal situation, its likely future development, and its impact on the economy in the context of a weak global recovery from the current crisis. The impact of the global crisis has been transmitted to the Indian economy through three distinct channels, namely: the financial sector, exports, and exchange rates. The other significant channel of impact is the slump in business and consumer confidence leading to decrease in investment and consumption demand. The Indian government, to boost the demand, has announced several stimulus packages. However, there is not much room for further fiscal policy action as the consolidated fiscal deficit of the central and state governments in 2009–2010 is already about 11% of the gross domestic product (GDP). Any further increase in the fiscal deficit to GDP ratio could invite a sharp downgrading of India’s credit rating and a loss of business confidence. The paper reviews the existing theories on the relationship between fiscal deficit and growth. It also analyzes the past trends and policy measures to understand the possible implications for economic recovery and long run growth in the Indian context. It also provides a long-term forecast of the fiscal deficit and public debt burden based on the past trends. Finally, the paper suggests a set of policy measures to get the Indian economy back on the path of sustained rapid and inclusive growth.
Citation
Kumar, Rajiv; Soumya, Alamuru. 2010. Fiscal Policy Issues for India after the Global Financial Crisis (2008-2010). © Asian Development Bank. http://hdl.handle.net/11540/3837. License: CC BY 3.0 IGO.Keywords
Public Financial Management
Financial System
Financial Statistics
Pension Funds
Mutual Funds
Social Equity
Financial Aspects
Fiscal Policy
Pension plans
Individual retirement accounts
Employee pension trusts
Investment management
Investments
Show allCollapse
Citable URI
http://hdl.handle.net/11540/3837Metadata
Show full item recordUsers also downloaded
-
Empowerment and Public Service Delivery in Developing Asia and the Pacific
Asian Development Bank (Asian Development Bank, 2013-04-01)Viewed as a key to strengthening accountability, citizen empowerment alone is not enough to guarantee quality public service. It must go hand in hand with better governance. This report highlights two factors that have improved governance and public service provision in developing Asia: (i) citizen participation and monitoring of service providers, and (ii) the use of information and communication ...Viewed as a key to strengthening accountability, citizen empowerment alone is not enough to guarantee quality public service. It must go hand in hand with better governance. This report highlights two factors that have improved governance and public ... -
A Comprehensive Analysis of Poverty in India
Panagariya, Arvind; Mukim, Megha (Asian Development Bank, 2014-06-30)This paper offers a comprehensive analysis of poverty in India. It shows that regardless of which of the two official poverty lines we use, we see a steady decline in poverty in all states and for all social and religious groups.Accelerated growth between fiscal years 2004–2005 and 2009–2010 also led to an accelerated decline in poverty rates. Moreover, the decline in poverty rates during these years ...This paper offers a comprehensive analysis of poverty in India. It shows that regardless of which of the two official poverty lines we use, we see a steady decline in poverty in all states and for all social and religious groups.Accelerated growth ... -
Performance and Sustainability of Self-Help Groups in India: A Gender Perspective. Asian Development Review, Vol. 27(1), pp. 80-103
Parida, Purna Chandra; Sinha, Anushree (Asian Development Bank, 2010-03-27)The existing literature on self-help group (SHG) bank linkage programs portrays them as an effective tool being used in various countries to approach a range of socioeconomic issues. This paper explores the performance and sustainability of this type of program in India at the group level. Because income-generating activities and other characteristics vary with the gender composition of self-help ...The existing literature on self-help group (SHG) bank linkage programs portrays them as an effective tool being used in various countries to approach a range of socioeconomic issues. This paper explores the performance and sustainability of this ...