1. Cooperative Federalism in India: Resetting the Fiscal Architecture: Lessons for India
- Author:
- Kandarp Patel and Anoop Singh
- Publication Date:
- 02-2023
- Content Type:
- Working Paper
- Institution:
- Centre for Policy Research, India
- Abstract:
- The COVID-19 pandemic brought significant challenges to public finances, raising global debt to record-high levels and necessitating the suspension of fiscal rules across the globe. As we approach the aftermath of the pandemic, the challenge is to reset the pillars of the fiscal architecture and better manage public finances across all levels of government—as the lynchpin of any successful growth strategy in a post-pandemic world. This situation offers an opportunity to rethink fiscal rules and make fiscal policy more agile in responding to crises, without undermining fiscal sustainability. A risk-based medium-term fiscal framework that combines standards, rules, and strengthened institutions would strike a better balance between flexibility and credibility. Overall, for India to achieve its full potential for economic growth and development, it needs to improve the quality and efficiency of public spending and financial management across all levels of government. In doing this, India should consider moving toward a new principle-based fiscal strategy, complemented with public financial management reforms and setting up an independent fiscal institution. This process will need to be undertaken in close collaboration with the States.
- Topic:
- Finance, Economic Growth, COVID-19, and Public Debt
- Political Geography:
- South Asia and India