Stabilization and Fiscal Empowerment : The Twin Challenges Facing India's States, Volume 2. Detailed Report
India, home to more than one billion people, has experienced rapid growth over the past decade, averaging about six percent per year between 1992/93 and 2003/04. The agenda backed in this report is one that receives widespread support from both the...
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| Language: | English en_US |
| Published: |
Washington, DC
2014
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| Online Access: | http://documents.worldbank.org/curated/en/2004/05/18526103/stabilization-fiscal-empowerment-twin-challenges-facing-indias-states-vol-2-2-detailed-report http://hdl.handle.net/10986/16775 |
| Summary: | India, home to more than one billion
people, has experienced rapid growth over the past decade,
averaging about six percent per year between 1992/93 and
2003/04. The agenda backed in this report is one that
receives widespread support from both the central and state
governments in India. The fiscal stress of the late nineties
gave rise to an intense state-level reform effort. Six years
on, this report documents the many initiatives undertaken by
the states to restore fiscal sustainability, and become more
effective agents of development. It outlines successes,
lessons learnt, and highlights further challenges, on both
the expenditure side (chapter two) and the revenue side
(chapter three). It also looks at the incentive framework
within which the states operate (chapter four), and asks
whether there is a feasible reform package that will take
the states not only out of fiscal crisis, but strengthened
to meet the development challenges which confront them. This
chapter provides the context for what follows by outlining
the role and increasingly divergent performance of the state
governments (section two), and then in turn, the genesis of
the fiscal crisis (section three), its developmental impact
(section four), the reform response of the state and central
governments (section five), and the reform challenges facing
the states today (section six). Although associated with an
increase in public spending, the fiscal crisis weakened the
developmental and poverty impact of state governments,
especially in the poorer states; it also called into
question India's overall fiscal sustainability. This
report is written to help share the lessons and
success-stories to date, and to assist states and the
central government in implementing the national agenda of
state-level fiscal stabilization and empowerment. Given the
low levels and the worrying recent trends in both the
quantity of expenditure in priority expenditure areas, and
the quality of expenditure across the board, there is an
urgent need for expenditure restructuring to free up fiscal
resources and for reforms to improve the quality of
spending. Focus in this chapter on areas where expenditure
can be cut rather than where it should be increased is not
because we think there are no areas of underfunding.
However, which particular areas should be increased, and by
how much, will likely vary from state to state, depending on
initial conditions, and identified priorities. The areas
where savings can be made have much more in common across
states, and so are the focuses of this report. |
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