Chapter

Fiscal Issues

T.N. Srinivasan

in Eight Lectures on India's Economic Reforms

Published in print June 2000 | ISBN: 9780195652826
Published online October 2012 | e-ISBN: 9780199080649 | DOI: http://dx.doi.org/10.1093/acprof:oso/9780195652826.003.0004
Fiscal Issues

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This chapter examines the history of fiscal reforms in India. Though there were major problems in the fiscal expansionism of the 1980s, it resulted in a mini-industrial boom in 1985–8 because of some liberalization in the form of delicensing some industries and permitting flexible use of capacity in others through changes in product-mix within the licensed capacity under so-called broad banding. This chapter discusses studies of India's fiscal situation focusing on state finances, tax reform, disinvestment, and reduction of subsidies. It argues that the economic and social rationales for a number of explicit and implicit budgetary subsidies of the central and state governments are weak or non-existent and explains that government subsidies reached as high as 14.4 per cent of gross domestic product in 1994–5. It proposes reduction of fiscal deficits by reducing or eliminating socially unnecessary subsidies and costly and ineffective programmes.

Keywords: fiscal reforms; fiscal expansionism; mini-industrial boom; delicensing; broad banding; state finances; tax reform; government subsidies; gross domestic product; fiscal deficits

Chapter.  3424 words. 

Subjects: Economic Development and Growth

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