India’S Experience with Fiscal Rules: An Evaluation and the Way Forward

41 Pages Posted: 19 Aug 2009

See all articles by Alejandro S. Simone

Alejandro S. Simone

International Monetary Fund (IMF)

Petia B. Topalova

International Monetary Fund (IMF)

Date Written: August 2009

Abstract

This paper examines India's experience with fiscal rules with a view to inform the design of a possible successor fiscal framework to the FRBMA. Among several proposals to strengthen the FRBMA, a framework that focuses medium-term fiscal policy on debt sustainability by the use of a medium term debt target, and annual nominal expenditure growth rules is proposed. This approach tackles the deficit bias at its core and enables countercyclical fiscal policy through automatic stabilizers. Numerical targets should be supported by structural reform measures for both revenues and expenditures, while the coverage of the fiscal rules should be expanded.

Keywords: Debt sustainability, Fiscal management, Fiscal policy, Fiscal reforms, Fiscal sustainability, India, Public debt

Suggested Citation

Simone, Alejandro S. and Topalova, Petia B., India’S Experience with Fiscal Rules: An Evaluation and the Way Forward (August 2009). IMF Working Paper No. 09/175, Available at SSRN: https://ssrn.com/abstract=1457598

Alejandro S. Simone (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, NW
Washington, DC 20431
United States

Petia B. Topalova

International Monetary Fund (IMF) ( email )

700 19th Street N.W.
Washington, DC 20431
United States

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