Structural modeling of fiscal structure for policy analysis: A case study of India

Abstract

Sustainability is a term that has been used with increasing frequency in the academic literature and recent multilateral policy discussions. Taking note of the crises in different countries heading for a debt trap it is necessary to look at the right combination of fiscal parameters and growth to achieve sustainability and stable development. Fiscal prudence involves exercise of good judgment, common sense, and even caution in the conduct of fiscal policies especially on the expenditure front. Fiscal consolidation is a process where government’s fiscal health is getting improved and is indicated by reduced fiscal deficit. Through some of policy measures like improved tax revenue realization and better aligned expenditure fiscal consolidation can be attainable. This paper empirically analyses the relationship between growth and debt and measures for fiscal consolidation using an empirical model. The period of study is from 1980 to 2016 and study is on central government of India.

Keywords

• sustainability
• fiscal consolidation
• debt-gdp