Growth Convergence and Public Finances of India and its States

Rajan Govil and Khyati Chauhan

No 2024/235, IMF Working Papers from International Monetary Fund

Abstract: Lack of convergence in per capita income across Indian states requires greater resources for lower-income states for investment and improved public services. Central and state governments need to raise revenue (both tax and non-tax), dismantle the administered pricing mechanism, reduce subsidies, and reorient expenditure toward national and state-level priorities. This is essential to ensure India remains on a sustainable fiscal path with higher growth, given the high public debt at the centre and state level. The observed wide differences in fiscal parameters across states require a tailored policy for each state. The large stock of debt of several states puts at risk the adequate financing of growth-enchancing expenditures.

Keywords: India; Growth Convergence; Central and State Public Finances; development expenditure; State public finances; state level; public finances of India; Capital spending; Government debt management; Total expenditures; Global (search for similar items in EconPapers)
Pages: 50
Date: 2024-11-15
New Economics Papers: this item is included in nep-fdg
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