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ID:
137698
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| Summary/Abstract |
Forward-looking approaches to fiscal sustainability generally assess the fiscal implications of future programme-specific expenditure. This article attempts to assess the future fiscal implications of the National Food Security Act (NFSA), 2013, for the Indian economy. The results, under the baseline scenario based on the projected debt–GDP ratio, indicate a modest increase till 2021–22 and then debt/GDP declines towards the current level of 70% in 2012–13, signifying fiscal sustainability. The dynamics of the projected baseline debt–GDP ratio are largely shaped by the provisions of the Act and underlying demographic factors during the projection horizon. Sensitivity analysis under different assumptions about productivity growth, the interest on government borrowing and primary deficit–GDP ratios show mixed results and hence provide necessary policy pointers towards restoring fiscal sustainability under the Act. Keeping the primary deficit–GDP ratio below 1.5 per cent through periodic upwards revisions in the issue price of food grains, as envisaged in the Act, coupled with higher productivity growth and lower interest on government debt, would ensure long-term fiscal sustainability of the Act.
JEL Classification: H24, H62, H68, J11, Q18
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| 2 |
ID:
165381
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| Summary/Abstract |
This study provides new evidence on the nexus between fiscal deficits and economic growth among ASEAN countries in the pre- and post-Global Financial Crisis (GFC) periods. Using annual data from 2001 to 2015, three results stand out. First, fiscal deficits are found to be growth-deteriorating in the pre-Crisis period and growth-enhancing in the post-Crisis period. Second, the impact of fiscal deficits on growth in pre- and post-GFC are robust to different measures of economic growth. Third, among control variables, inflation is important in influencing economic growth in the pre-Crisis period while exchange rate and inflow of foreign direct investment have a positive impact on growth in the post-Crisis period.
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