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

ExpenditureSubscribe to Expenditure

Spiralling Prices

It is a clear case of the government doing too little too late.

Poverty and Deprivation in India

Building on the asset-based indicator, this paper estimates deprivation in India. The results suggest that there is a difference in the regional ranking of poverty based on the long-term picture of vulnerability provided by the asset-based indicator of deprivation. It also shows that while consumption poverty could identify the poor as a group, it cannot identify who among the poor are suffering from long-term deprivation, thus seeking a prompt policy attention.

Household Consumption Expenditure Inequality in Rural India (1993–94 to 2011–12)

The comparative role of determinants of household-level consumption expenditure inequalities (henceforth, inequalities) in rural India between two sub-periods, 1994–2005 and 2005–12 are examined, using three rounds of the National Sample Survey Consumer Expenditure Survey. The changes in the components of consumption expenditure and population characteristics are explored that explain inequalities during the two sub-periods, which represent distinct policy environments. We use both a priori and regression-based decomposition methods for the analysis. We find that there is a complete reversal of the role of education in explaining inequalities. It shifted from being an inequality-increasing factor during 1994–2005 to an inequality-equalising factor during 2005–12. This reversal is induced by decreasing consumption returns to education due to the depressed job market. The role of locational factors has increased in explaining the increase in inequalities over time. The non-food components induce an increase in the overall inequalities via an increased expenditure on durables. The within-group component contributes the most to the level of and change in inequalities.

Fifteenth Finance Commission Recommendations

While trying to balance the competing demands from the union and the states, the Fifteenth Finance Commission has done a commendable job, but has also sacrificed objectivity at times.

Time for a Massive Fiscal Stimulus

Only bold interventions by the government can ensure a quick recovery of the economy.

Inclusive Fiscal Adjustment for Reviving Growth

Unrealistic revenue projections leading to strong expenditure compression is primarily responsible for India’s growth deceleration. Growth will decelerate further without a programme of deep fiscal adjustment. How a fiscal space, amounting to over 6% of the gross domestic product, can be freed through such an adjustment programme is demonstrated. This space can be potentially used for an inclusive public expenditure-led strategy for reviving growth.

State Level Debt–Deficit Dynamics

An analysis of the debt and deficit of states based on the budget estimates of 2016–17 shows that almost half of them have a fiscal deficit target higher than the limit set in the Fiscal Responsibility and Budget Management Act. These states need to focus on the quality of expenditure and elimination of revenue deficit as per the framework proposed by the Fourteenth Finance Commission to enhance state-level capital spending.

Beyond Fiscal Prudence and Consolidation

Since sustainable deficit could be different than the numeric fiscal rule, a review of the Fiscal Responsibility and Budget Management Act is timely and important. However, such a review should bear in mind that macro-stabilisation is a central function and the burden of fiscal adjustment should squarely fall on the union government keeping state debt and deficits withinFRBM limits. Maintaining the higher tax to gross domestic product ratio of last year will be key for fiscal prudence in 2016-17.

Explaining Cross-Country Variation in Income Inequality

Most earlier studies exploring the cross-ountry variation in the degree of income inequality (measured by Gini ratio) are valuable but for the inappropriate data on inequality comprising estimates of Gini from incomparable data sets such as national and sub-ational surveys, per person and per household income distributions, and income and expenditure distributions. This paper explores the cross-ountry variation in income inequality based on relatively more comparable data and suggests that public policy aimed at reducing inequality and freedom may be the key variables that explain the variation in the Gini across countries. Prospects for launching national policy initiatives to reduce inequalities are rather dim since globalisation could be conveniently used to rationalise a relatively high level of income inequality.

Reinventing Indian Railways: Derailed Agenda

Although the Expert Group's report provided a road map of sorts for transforming the Indian Railways, the budget proposals for 2002-03 surprisingly enough provide little indication that the ministry has any intention of setting the railways on a growth path.

UP on the Financial Brink

With the lowest ratio, among all the states, of per capita tax revenue to per capita income, successive state governments in UP have relied on the soft option of borrowing. Interest payments, establishment and pensions together with debt repayment account for over 70 per cent of total government expenditure. Not surprisingly, it has been necessary to effect a cut in expenditure on economic services in the government's budget for 2001-2002.
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