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

GDPSubscribe to GDP

The State of State Finances

Only a generous award by the Fifteenth Finance Commission can restore fiscal balance. */ */

Issues of Compliance in GST

Debates on compliance audits of the goods and services tax will have to move beyond mere “invoice matching” to more holistic approaches for data reconciliation that can enable effective tax enforcements, and compliance risk assessment and mitigation.

Changing Dynamics of Inflation in India

Using the latest consumer price index (combined) series, it is found that the dynamics underlying India’s inflationary process have changed substantially. Significant reduction found in the inflation persistence reflects anchoring of inflationary expectations. Moreover, it is the headline inflation that reverts to the core and not vice versa, as was assumed so far. It implies the absence of any significant second-round effects. These features need to be taken into account for any policy analysis. Attempting to forecast inflation using various econometric techniques, it is found that a combination of alternative models based on mean square errors improves forecast accuracy as compared to any individual model.

Quarterly GDP Estimation

The latest quarterly estimates of gross domestic product by the new National Accounts Statistics methodology are once again in the news for the wrong reasons. With inadequate accurate information available on a quarterly basis, the estimates hardly represent the state of the economy and reflect the effects of demonetisation over the October–December 2016 period.

Regional Divergence and Inequalities in India

The question of regional development holds special significance for India, given that the regions are not entirely homogeneous. The high growth rate of the economy as a whole has not led to a similar growth pattern for its regions. An analysis on regional convergence across 15 major states in India suggests that there is divergence of the aggregate economy for the period 1970–71 to 2013–14. The findings therefore do not lend support to the expectations of the neoclassical convergence hypothesis according to which poor regions tend to catch up with the advanced regions in the long run leading to regional convergence.

Majoritarian Rationale and Common Goals

Looking at existing policy instruments and goals, and the economic and social outcomes they promise to deliver, it is argued that majoritarian politics and social and cultural outcomes are not part of fringe thinking. The politics of hate actually works to build a consensus for ruling class economics. It is not surprising, therefore, that the only "nationalist outlook" of our times is to stand firmly behind the policy programme for the global investor.

IMF's Autocritique of Neo-liberalism?

In a recent article published in Finance and Development, an International Monetary Fund magazine, three economists have critically evaluated the policies the IMF promotes. They acknowledge evidence that suggests that economic growth under neo-liberalism is difficult to sustain, that it leads to an increase in inequality, and that continuing inequality is harmful for sustainable (or continuing) growth.

Evolving Centre–State Financial Relations

After the Fourteenth Finance Commission award, aggregate transfers as a percentage of gross domestic product has increased, while grants as a percentage of GDP has declined. The centre is resorting to cess and surcharges that are not shared with the states. This would mean denial of revenue to states, which goes against the spirit of the Constitution. Further, the states have a reduced untied fi scal space, with the union’s share in Centrally Sponsored Schemes in 2016–17 (BE) being reduced. Finally, in the absence of plan transfers, post 2017–18, the focus should be to develop a framework for non-fi nance commission grants to states which is predictable and certain.

Pages

Back to Top