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Structural modeling of fiscal structure for policy analysis: A case study of India

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  • Rajbhushan J NAYAK

    (Sri Sathya Sai Institute of Higher Learning, Prasanthinilayam, India)

  • Vishwanath PANDIT

    (Sri Sathya Sai Institute of Higher Learning, Prasanthinilayam, India)

  • Gopakumar K. U

    (Sri Sathya Sai Institute of Higher Learning, Prasanthinilayam, India)

Abstract

Sustainability is a term that has been used with increasing frequency in the academic literature and recent multilateral policy discussions. Taking note of the crises in different countries heading for a debt trap it is necessary to look at the right combination of fiscal parameters and growth to achieve sustainability and stable development. Fiscal prudence involves exercise of good judgment, common sense, and even caution in the conduct of fiscal policies especially on the expenditure front. Fiscal consolidation is a process where government’s fiscal health is getting improved and is indicated by reduced fiscal deficit. Through some of policy measures like improved tax revenue realization and better aligned expenditure fiscal consolidation can be attainable. This paper empirically analyses the relationship between growth and debt and measures for fiscal consolidation using an empirical model. The period of study is from 1980 to 2016 and study is on central government of India.

Suggested Citation

  • Rajbhushan J NAYAK & Vishwanath PANDIT & Gopakumar K. U, 2020. "Structural modeling of fiscal structure for policy analysis: A case study of India," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(3(624), A), pages 139-160, Autumn.
    • Handle: RePEc:agr:journl:v:3(624):y:2020:i:3(624):p:139-160
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    References listed on IDEAS

    as
    1. N. R. Bhanumurthy & Sukanya Bose & Parma Chakravartti, 2018. "Targeting Debt and Deficits in India: A Structural Macroeconometric Approach," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 16(1), pages 87-119, December.
    2. Ms. Hélène Poirson & Mr. Luca A Ricci & Ms. Catherine A Pattillo, 2004. "What Are the Channels Through Which External Debt Affects Growth?," IMF Working Papers 2004/015, International Monetary Fund.
    3. Mundle, Sudipto & Bhanumurthy, N.R. & Das, Surajit, 2011. "Fiscal consolidation with high growth: A policy simulation model for India," Economic Modelling, Elsevier, vol. 28(6), pages 2657-2668.
    4. V. Pandit, 2000. "Macroeconometric Policy Modeling for India: A Review of Some Analytical Issues," Working papers 74, Centre for Development Economics, Delhi School of Economics.
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