Articles by M Govinda Rao

World Bank on Fiscal Adjustment in India M Govinda Rao R T Shand K P Kalirajan The World Bank's Country Economic Memorandum (CEM) on India this year reviews the progress of fiscal reforms at central and state levels. However, like in the past, the emphasis on reducing fiscal deficits rather than increasing public savings robs the analysis much of the relevance. Also, its assertion that there is no further scope for expenditure compression and additional deficit reduction should be achieved by increasing taxes is not based on sound empirical analysis. In fact, such a recommendation may signal a spate of spending on populist schemes as has been seen recently. Similarly, attributing fiscal problems at the state level to inadequate revenue efforts is not based on facts. This can not only encourage profligacy, but also may introduce additional sources of inefficiency.

pre-1989 period, and in the light of the sweep- ing political development of the last three yean and fundamental changes taking place in the former socialist economies, it is not yet clear how these provisions will be or have already been altered.

M Govinda Rao This paper seeks to examine the present state of public finance at the state level with a view to tracing the emerging trends in the medium as well as long term. The objective is to identify the major problem areas and to indicate the policy changes needed to tackle them. Section I of the paper brings out the seriousness of the fiscal problem at the state level. The major trends in expenditure and revenue are discussed, respectively, in Sections II and III and Section IV deals with the policy changes to deal with the identified problems.

Some Conceptual and Methodological Comments M Govinda Rao The Ninth Finance Commission has broken new ground in some respects. In particular, the attempt at linking transfers to offset the fiscal disadvantages of states is noteworthy. However, the commission has missed the opportunity to make an integrated assessment of the revenue accounts of the states. The continued adherence to the compartmentalised approach to assessing the plan and non-plan sides of the states' budgets is clearly a disappointment Also, it is doubtful that the states and the centre will adhere to the plan of phasing our revenue deficits. While non-adherence by the states will largely reduce their investments, that by the centre will hurt the economy as a whole.

Cost and Efficacy of Fiscal Incentives Case of Sales Tax Subsidy V B Tulasidhar M Govinda Rao Fiscal incentives to promote industrial development have multiplied, but their cost and their effect on industrialisation remain indeterminate. There exist some studies of fiscal incentives extended by the Central government, but those given by State governments remain an unexplored area.