Fiscal Policy, Devolution and Indian Economy

N R Bhanumurthy, Sukanya Bose () and Sakshi Satija
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Sakshi Satija: National Institute of Public Finance and Policy

Working Papers from National Institute of Public Finance and Policy

Abstract: In this paper, an attempt has been made to look at four empirical issues that may be of interest to the fiscal policy in India and especially to the 15th Finance Commission: what has been the impact of higher devolution of Central taxes to the States on overall economic growth, fiscal balance and other indicators? What could be the impact of changes in external conditions on the macroeconomic prospects? What mix of expenditure policies would allow the Indian economy to achieve higher growth and fiscal consolidation? And finally, can India achieve the medium term target of US$ 5 Trillion by 2024-25? To address these issues, this paper uses a modified NIPFP-macroeconomic policy simulation model for the Indian economy. Higher devolution share to the States, vis- -vis the baseline scenario, causes economic growth to be marginally lower by 0.4

Pages: 30
Date: 2019-12
New Economics Papers: this item is included in nep-mac
Note: Working Paper 287, 2019
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Citations: View citations in EconPapers (3)

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