Emerging Issues in Fiscal Sustainability in India: A Study of Central Government Finances, 1979–1980 to 2018–2019

Anita Rath and Arpit Sachan

South Asian Journal of Macroeconomics and Public Finance, 2022, vol. 11, issue 1, 39-68

Abstract: The objective of the article is to examine the fiscal sustainability of the Indian central government’s finances in the era of rule-based fiscal policy. Asymmetric budgetary adjustment process and revenue–expenditure nexus are also analysed in this article by employing threshold autoregressive models/momentum threshold autoregressive models. Findings of the article reveal emerging issues in fiscal sustainability in India. The central government’s expenditure as a share of gross domestic product (GDP) has been falling continuously, leaving little room for further pruning. The current scenario of negative growth in central government’s revenue as a share of GDP, if not reversed, can become the Achilles heel of government finances in India. JEL Classification: E62, H600, H500, C32

Keywords: Fiscal policy; national budget; deficit and debt; national government expenditure; threshold cointegration/time-series models (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:sae:smppub:v:11:y:2022:i:1:p:39-68

DOI: 10.1177/2277978721989929

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