ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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A Risk Perspective on the Union Budget 2001

A Risk Perspective on the Union Budget 2001

Since the government has claimed to initiate second generation economic reforms with the budget for 2001-2002, it is useful to discuss the budget proposals with reference to their impact on the incidence of risk and the risk-bearing ability of the central government.

Economic reforms are generally seen as a pathway to economic growth and efficiency. Efficiency is expected to be achieved through more competition among market participants and integration of different markets. However, with increasing marketisation, incidence of risk is likely to increase as market risks become more prominent. Market deepening and development may also facilitate risk-sharing and management. However, these aspects are rarely discussed in the context of reforms. The union budget for 2001-2002 has been heralded as the harbinger of second generation economic reforms which seek to extend the reforms to the labour market. It may therefore be useful to discuss the budget proposals with reference to their impact on the incidence of risks and risk-bearing ability of the central government.

Risks and Reforms

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