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Fiscal reforms at the sub-national level: The case of Punjab

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  • Sawhney, Upinder

    (National Institute of Public Finance and Policy)

Abstract

The importance and need for sub-national fiscal reforms is all too obvious in India where the States are facing severe fiscal imbalances since the beginning of the nineties. A decade of political strife in the eighties, followed by populist economic policies in the nineties led to a massive fiscal deterioration in Punjab, hampering its overall growth process. The Fiscal Reform Programme in the state was initiated in 1999 with the signing of a Memorandum of Understanding between the Government of India and the Punjab government. This was followed by the setting up of various committees and commissions to look into the problems of revenue mobilisation, expenditure management, public enterprises and the power sector. The more recent effort towards fiscal consolidation has been the enactment of Fiscal Responsibility and Budget Management Act, 2003. The assessment of the entire fiscal reform effort of the state reveals that the Punjab government is seized of the seriousness of the situation, admits the gravity of consequences but lacks the grit and determination to implement certain hard decisions for fiscal restructuring. The government is very much caught up in the web of populist policies and succumbs readily to political pressure against certain unpopular decisions for attaining fiscal stability. The success of the fiscal reform programme depends only on the administrative competence and political will of the government towards achieving longterm fiscal consolidation and restoration of fiscal balances in the state.

Suggested Citation

  • Sawhney, Upinder, 2005. "Fiscal reforms at the sub-national level: The case of Punjab," Working Papers 05/26, National Institute of Public Finance and Policy.
    • Handle: RePEc:npf:wpaper:05/26
    Note: Working Paper 26, 2005
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    File URL: http://www.nipfp.org.in/working_paper/wp05_nipfp_026.pdf
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    1. repec:npf:wpaper:15 is not listed on IDEAS
    2. Rajaraman, Indira, 2004. "Fiscal developments and outlook in India," Working Papers 04/15, National Institute of Public Finance and Policy.
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    Cited by:

    1. Narayan, Laxmi, 2015. "Some Aspects of Haryana State Finances –An Exploratory Analysis," MPRA Paper 64697, University Library of Munich, Germany, revised Apr 2015.
    2. Maurya, Nagendra Kumar, 2014. "Debt sustainability of state finances of Uttar Pradesh government," MPRA Paper 55692, University Library of Munich, Germany.

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    Keywords

    Fiscal reforms ; Punjab;

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