Fiscal Sustainability of States in India:Evidence of Fiscal Fatigue

Basanta K Pradhan and Anjali Prashad ()
Additional contact information
Anjali Prashad: Institute of Economic Growth, Delhi

No 378, IEG Working Papers from Institute of Economic Growth

Abstract: Asufficiency condition for fiscal sustainability is often suggested to augment primary balance to meet the challenge of increasing debt stock. But such an adjustment may not always result in areduction of debt stock if fiscal consolidation exhibits “fiscal fatigue†, a situation in which primary balance turns irresponsive or negatively reacts to the debt stock. This paper attempts to investigate whether primary balance adjustment to changing debt levels by the Indian States display such a characteristic. The study of debt-deficit data of 10 major States of India for a period from 1990-91 to 2014-1 5gives empirical evidence of fiscal fatigue in the primary balance adjustment to debt stabilization.

Keywords: Fiscal Responsibility and Budget Management Act; fiscal fatigue; debt stock; income growth; fiscal priority spending. (search for similar items in EconPapers)
JEL-codes: H11 H12 H61 H62 H63 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2018
References: Add references at CitEc
Citations:

Published as Institute of Economic Growth, Delhi, 2018, pages 1-30

Downloads: (external link)
https://iegindia.org/upload/publication/Workpap/wp378.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:awe:wpaper:378

Access Statistics for this paper

More papers in IEG Working Papers from Institute of Economic Growth
Bibliographic data for series maintained by ().