Abstract
Public finances in India are at a turning point. Analysis of the past data shows that no major improvement in any of the major fiscal indicators. Restructure of debt, reforms in power sector and implementation of other issues under MTFRP hold promise for future. The Centre is carefully treading the path of fiscal prudence but State finances are slipping. The main objective of this paper is to suggest restructuring of public finances of the Centre and state governments to provide macroeconomic stability, equitable growth in the country and improve efficiency of resources. The paper also suggests ways to augment revenue resources and contraction in expenditure On the contrary, other fiscal indicators have shown significant deterioration. Thus the claims about fiscal adjustment are illusory. Fiscal consolidation in India perhaps need more attention and commitment. A comparison of deficits of Centre and state are made from period 1991-92 to 2016-17.Keywords: Public Finance, India, revenue, expenditure, deficits.JEL Classifications: H1, H2, H5, H7DOI: https://doi.org/10.32479/ijefi.11732
Highlights
The financial condition of Indian government has been a cause for concern for some time
The Center walks the road of fiscal prudence cautiously, but government finances are sliding
Analysis shows that the decline in the fiscal deficit was comparably negligible
Summary
The financial condition of Indian government has been a cause for concern for some time now. The Covid-19 crisis is likely to give government financial management a tough time as it may affect its divestment plans, a reduction in tax collections in the midst of sluggish growth, and pressure on fiscal deficit goals. The government has set a Rs 16.3 lakh crore tax revenue target for FY21, with a growth rate of 8 per cent from the previous fiscal year. The target for tax revenue was set at Rs 16.3 lakh crore, considering a nominal GDP growth rate of 10 per cent. The IMF has, downgraded India’s GDP growth rate to 1.9%, and bringing the inflation rate to 4%, India’s nominal GDP growth rate will drop to 6% In such a situation, growth in tax revenues will be substantially lower than the target being budgeted. The manner in which the government has identified fiscal indicators as targets for correction and its numerous attempts to mask and window-dress the numbers on different fiscal indicators accurately illustrates this proposal (Rao, 2000)
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