The Quest for the Holy Grail: Efficient and Equitable Fiscal Consolidation in India

Chadi Abdallah, David Coady, Sanjeev Gupta and Emine Hanedar

No 2015/152, IMF Working Papers from International Monetary Fund

Abstract: Achieving fiscal consolidation without undermining growth and poverty-reduction efforts is a key policy challenge in many countries. Using India as an illustration, this paper shows how a mix of well-designed taxation and spending policies can help address these challenges. On the tax side, the analysis focuses on increasing consumption taxes on goods with negative consumption externalities. On the spending side, some of the additional revenues from the tax reform are allocated to scaling up key social transfer programs. Substantial additional gains are possible if the increased social transfers can be accompanied by improved targeting.

Keywords: WP; income group; price; share; fiscal redistribution; fiscal consolidation; efficient consumption taxes; social transfers; targeting; India; benefit share; population share reference; percentage impact; retail price; lower-income groups; kerosene consumption; household income; income decile; price gap; Income; Consumption; Estate tax; Income distribution; Global (search for similar items in EconPapers)
Pages: 24
Date: 2015-07-13
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Citations: View citations in EconPapers (3)

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