Please use this identifier to cite or link to this item: https://repository.iimb.ac.in/handle/2074/12248
Title: India’s primary deficit and interest payments burden: an assessment; special Issue on “Restructuring public finance for equitable growth. issues before the 12th finance commission”
Authors: Vivek, Moorthy 
Keywords: Federal budget deficit;National debt;Interest rates;Revenue;Gross domestic product;Debt consolidation;Economic growth rate;Domestic debt;Outstanding debt
Issue Date: 2004
Publisher: Sameeksha Trust
Abstract: This paper provides a critique of the 'consensus' view that a worsening revenue deficit and debt situation have prevented fiscal consolidation and argues that the fundamental problem has been a deteriorating fiscal deficit. It explains the distinction between worsening deficit and debt conditions using time period simulators with relevant variables from the Domar debt model. It shows that a rising debt ratio, which might appear to be due to unfavourable interest rate dynamics, can be related to a previous rise in the primary deficit. The Finance Commission mandated centre-state transfers are predicated upon economic performance indicators based on the revenue deficit; the validity of the consensus view is then critical in evaluating the efficacy of the transfer criteria.
URI: https://repository.iimb.ac.in/handle/2074/12248
ISSN: 0012-9976
2349-8846
Appears in Collections:2000-2009

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