NATIONAL ECONOMIC PLANNING

NEP, RELEVANCE OF FISCAL POLICY – 2007 (IIPM, Hyderabad) COPYRIGHTED COPYRIGHTE

Picture 3

Substantiating the

Fiscal Oversight

NEP, RELEVANCE OF FISCAL POLICY – 2007 (IIPM, Hyderabad) COPYRIGHTED COPYRIGHTE

NEP, RELEVANCE OF FISCAL POLICY – 2007 (IIPM, Hyderabad) COPYRIGHTED COPYRIGHTE

NEP, RELEVANCE OF FISCAL POLICY – 2007 (IIPM, Hyderabad) COPYRIGHTED COPYRIGHTE

NEP, RELEVANCE OF FISCAL POLICY – 2007 (IIPM, Hyderabad) COPYRIGHTED COPYRIGHTE

First seen in during the Era of Harappa Culture (3300 BC to 1600 BC)

NEP, RELEVANCE OF FISCAL POLICY – 2007 (IIPM, Hyderabad) COPYRIGHTED COPYRIGHTE

The Initiation of Modern Fiscal Policy (14th AD to 17th AD) (RENAISSANCE)

NEP, RELEVANCE OF FISCAL POLICY – 2007 (IIPM, Hyderabad) COPYRIGHTED COPYRIGHTE

NEP, RELEVANCE OF FISCAL POLICY – 2007 (IIPM, Hyderabad) COPYRIGHTED COPYRIGHTE

E
= Y E
E= T (YC ) + +I G

Income, Output

Y

NEP, RELEVANCE OF FISCAL POLICY – 2007 (IIPM, Hyderabad) COPYRIGHTED COPYRIGHTE

NEP, RELEVANCE OF FISCAL POLICY – 2007 (IIPM, Hyderabad) COPYRIGHTED COPYRIGHTE

NEP, RELEVANCE OF FISCAL POLICY – 2007 (IIPM, Hyderabad) COPYRIGHTED COPYRIGHTE

STABILIZE BY CONTROL DEVELOP BY REGULATION
NEP, RELEVANCE OF FISCAL POLICY – 2007 (IIPM, Hyderabad) COPYRIGHTED COPYRIGHTE

GROW TO DEVELOP BACK TO SQUARE ONE – DEVELOP BY HIGH REGULATION
NEP, RELEVANCE OF FISCAL POLICY – 2007 (IIPM, Hyderabad) COPYRIGHTED COPYRIGHTE

Ohh.. GOD ‘S WHAT’S WRONG WITH THE POLICIES – ECONOMICAL CRISIS
NEP, RELEVANCE OF FISCAL POLICY – 2007 (IIPM, Hyderabad) COPYRIGHTED COPYRIGHTE

ADOPT WHAT OTHERS DID – (No Other way Left) BUT STILL FOLLOW OWN STYLE
NEP, RELEVANCE OF FISCAL POLICY – 2007 (IIPM, Hyderabad) COPYRIGHTED COPYRIGHTE

INDIA IS ALREADY CONFUSED DO WHATEVER YOU WANT TO DO
NEP, RELEVANCE OF FISCAL POLICY – 2007 (IIPM, Hyderabad) COPYRIGHTED COPYRIGHTE

NEP, RELEVANCE OF FISCAL POLICY – 2007 (IIPM, Hyderabad) COPYRIGHTED COPYRIGHTE

NEP, RELEVANCE OF FISCAL POLICY – 2007 (IIPM, Hyderabad) COPYRIGHTED COPYRIGHTE

• 12

TH

Largest Economy in the World as per GDP in US DOLLARS Largest Economy in the World as per GDP in US DOLLAR (PURCHASING POWER PARITY)

•3

RD

•2

ND

Fast Growing MAJOR ECONOMY @ 9.2 %

• TRILLION DOLLAR ECONOMY.
* Sources : Worldbank.org
NEP, RELEVANCE OF FISCAL POLICY – 2007 (IIPM, Hyderabad) COPYRIGHTED COPYRIGHTE

* Sources : RBI YEAR REPORT 2006 - 2007 NEP, RELEVANCE OF FISCAL POLICY – 2007 (IIPM, Hyderabad) COPYRIGHTED COPYRIGHTE

* Sources : RBI YEAR REPORT 2006 - 2007 NEP, RELEVANCE OF FISCAL POLICY – 2007 (IIPM, Hyderabad) COPYRIGHTED COPYRIGHTE

* Sources : RBI YEAR REPORT 2006 - 2007 NEP, RELEVANCE OF FISCAL POLICY – 2007 (IIPM, Hyderabad) COPYRIGHTED COPYRIGHTE

* Sources : RBI YEAR REPORT 2006 - 2007 NEP, RELEVANCE OF FISCAL POLICY – 2007 (IIPM, Hyderabad) COPYRIGHTED COPYRIGHTE

* Sources : RBI YEAR REPORT 2006 - 2007 NEP, RELEVANCE OF FISCAL POLICY – 2007 (IIPM, Hyderabad) COPYRIGHTED COPYRIGHTE

* Sources : CENSUS REPORT 2001 NEP, RELEVANCE OF FISCAL POLICY – 2007 (IIPM, Hyderabad) COPYRIGHTED COPYRIGHTE

* Sources : CENSUS REPORT 2001 NEP, RELEVANCE OF FISCAL POLICY – 2007 (IIPM, Hyderabad) COPYRIGHTED COPYRIGHTE

NEP, RELEVANCE OF FISCAL POLICY – 2007 (IIPM, Hyderabad) COPYRIGHTED COPYRIGHTE

* Sources : RBI YEAR REPORT 2006 - 2007 NEP, RELEVANCE OF FISCAL POLICY – 2007 (IIPM, Hyderabad) COPYRIGHTED COPYRIGHTE

* Sources : RBI YEAR REPORT 2006 - 2007 NEP, RELEVANCE OF FISCAL POLICY – 2007 (IIPM, Hyderabad) COPYRIGHTED COPYRIGHTE

India has the largest paramilitary force in the world. Indian Army is the third-largest army in the world. Indian Air Force is the fourth-largest air force in the world. Indian Navy is the fifth largest in the world.

NEP, RELEVANCE OF FISCAL POLICY – 2007 (IIPM, Hyderabad) COPYRIGHTED COPYRIGHTE

• India is Ranked the 6
Launches.

th

Country in the World in Terms of Satellite

Of the Fortune 500 companies, 220 outsource their Softwarerelated work to India. There are over 70,000 Bank Branches in India - among the highest in the World. The Kumbh Mela Festival, attracts 25 million people (more than the Population of 185 of the 227 Countries in the World).
NEP, RELEVANCE OF FISCAL POLICY – 2007 (IIPM, Hyderabad) COPYRIGHTED COPYRIGHTE

NEP, RELEVANCE OF FISCAL POLICY – 2007 (IIPM, Hyderabad) COPYRIGHTED COPYRIGHTE

NEP, RELEVANCE OF FISCAL POLICY – 2007 (IIPM, Hyderabad) COPYRIGHTED COPYRIGHTE

Economy to Grow at 9.4 (GDP) Total Revenue to stand at 6,80,521 @ 14.69 % growth. Fiscal Deficit to stand at 1,44,950 (3.13 of GDP) (net) (Rs. Crores)
* Sources : RBI YEAR REPORT 2006 - 2007

Average Inflation in POLICY – 2007 (IIPM, Hyderabad) COPYRIGHTED NEP, RELEVANCE OF FISCAL FY'08 to be 4 – 4.5 % COPYRIGHTE

• •

All Pvt. & Public Sector Banks which have more than 200 Branches necessarily need open 10 New Branches in Rural Areas of Each State by End Financial year 2010. Allocation for Education to be Enhanced by 22.5 % (from 19.7 %).

• State Govts. (Combined) need to be given an estimated •

Rs. 2300 Crores for Water Management & Special Team for Monitoring to be setup. Ad valorem Duty on Petrol & Diesel should to be brought down from 8 % to 5 % & remain Stable for next 2 Yrs.
NEP, RELEVANCE OF FISCAL POLICY – 2007 (IIPM, Hyderabad) COPYRIGHTED COPYRIGHTE

• •

Allocation on Healthcare should be Increased by 22.5 % from Previous Year. (50 % Compulsory for Rural Areas) Benefits for Investing in Venture Capital Funds Confined to Heavy Engineering, Manufacturing & Electricity Generation.

• An •

Investment of Rs. 275 Crore for R&D in the Field of Agricultural Research. Tourism Infrastructure needs to be allotted an Amount of Rs. 600 Crores. (Rs.520 Crore 07’08’)
NEP, RELEVANCE OF FISCAL POLICY – 2007 (IIPM, Hyderabad) COPYRIGHTED COPYRIGHTE

The Quality of Public Expenditures has Deteriorated – can rationalize Govt. through Internal Restructuring Privatization Subsidy Reduction Better Management of Pay and Pensions.
NEP, RELEVANCE OF FISCAL POLICY – 2007 (IIPM, Hyderabad) COPYRIGHTED COPYRIGHTE

NEP, RELEVANCE OF FISCAL POLICY – 2007 (IIPM, Hyderabad) COPYRIGHTED COPYRIGHTE

Interest on Loans may be Subsidized.

Loans may be Rescheduled.

Loan Guarantees can Serve as a Subsidy also.

NEP, RELEVANCE OF FISCAL POLICY – 2007 (IIPM, Hyderabad) COPYRIGHTED COPYRIGHTE

NEP, RELEVANCE OF FISCAL POLICY – 2007 (IIPM, Hyderabad) COPYRIGHTED COPYRIGHTE

Systemic Reform is Complex and Difficult, even when done Piecemeal. Diversity and Regional Inequality create Political Hurdles and Exacerbate Internal Political Tensions Need to Build New Political Coalitions for Governmental Reforms.
NEP, RELEVANCE OF FISCAL POLICY – 2007 (IIPM, Hyderabad) COPYRIGHTED COPYRIGHTE

Several other Simultaneous Developments Heighten the Challenges:

• Major Local Government Reform. • Liberalization and move away from •
Red Tape & Corruption.

Govt. Intervention,

including Re-evaluation of Govt. Economic Planning.

NEP, RELEVANCE OF FISCAL POLICY – 2007 (IIPM, Hyderabad) COPYRIGHTED COPYRIGHTE

Year 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 (RE)* 2005-06 (BE)** 2006-07 (BE)

Center 6.6 4.7 4.8 6.4 4.7 4.2 4.1 4.8 5.1 5.4 5.7 6.1 5.9 4.5 4.0 4.1 3.8

States 3.3 2.9 2.8 2.4 2.7 2.6 2.7 2.9 4.2 4.6 4.3 4.2 4.7 4.4 4.0 3.1 n.a. Total 9.4 7.0 7.0 8.3 7.1 6.5 6.4 7.3 9.0 9.6 9.8 9.9 9.6 8.5 8.4 7.7 n.a.

Consolidated Revenue Primary 4.2 5.0 3.4 2.3 3.2 2.1 4.3 3.3 3.7 1.9 3.2 1.6 3.6 1.3 4.1 2.1 6.4 3.7 6.3 3.9 6.6 4.0 6.9 3.7 6.7 3.1 5.8 2.1 4.1 2.3 3.4 1.8 n.a. n.a.

* Sources : RBI YEAR REPORT 2006 - 2007 NEP, RELEVANCE OF FISCAL POLICY – 2007 (IIPM, Hyderabad) COPYRIGHTED COPYRIGHTE

YEAR 1990 – 1991 1995 – 1996 2001 – 2002 2002 – 2003 2003 – 2004 2004 – 2005 2005 – 2006 2006 – 2007 (RE) 2007 – 2008 (BE)

DEBT (% OF GDP) 49.8 % 46.7 % 56.8 % 61.0 % 61.1 % 61.8 % 60.7 % 59.0 % 56.* %

* Sources : RBI YEAR REPORT 2006 - 2007 NEP, RELEVANCE OF FISCAL POLICY – 2007 (IIPM, Hyderabad) COPYRIGHTED COPYRIGHTE

NEP, RELEVANCE OF FISCAL POLICY – 2007 (IIPM, Hyderabad) COPYRIGHTED COPYRIGHTE

NEP, RELEVANCE OF FISCAL POLICY – 2007 (IIPM, Hyderabad) COPYRIGHTED COPYRIGHTE

Years

1975-76 1980-81 1985-86 1990-91 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02*

Per Capita Transfers (1993-94 Rupees) 198.2 272.2 381.0 449.9 450.8 487.0 578.0 469.9 504.1 580.1 633.1

Percentage of transfers to GDP 3.67 4.84 5.55 4.66 4.28 4.28 4.86 3.73 3.80 4.41 4.49

Percentage of transfers to Central Revenues 31.80 34.80 40.98 39.06 36.53 36.35 43.66 34.46 32.62 35.38 35.80

Percentage Percentage of transfers of transfers to State to State Revenues Expenditure 38.64 44.80 43.81 47.50 45.62 46.42 38.37 30.85 38.61 31.07 39.97 31.83 44.91 35.33 37.69 26.29 36.46 25.05 37.41 26.92 38.02 28.30

Note: * Revised estimates Source: Indian Economic Statistics/ Public Finance Statistics. Ministry of Finance, Government of India

NEP, RELEVANCE OF FISCAL POLICY – 2007 (IIPM, Hyderabad) COPYRIGHTED COPYRIGHTE

Decentralization to Local Level.

• • • •

Improve Accountability. Substitute the ‘Voice’ for Hierarchical Control. Move Regulation & Monitoring of Local Govts. from Discretion to Rules & Outcome-based Approach. Need Greater Assignment of Revenue Authority to Local Govts.

NEP, RELEVANCE OF FISCAL POLICY – 2007 (IIPM, Hyderabad) COPYRIGHTED COPYRIGHTE

• • •

Constitutional Amendments, in 1993, Strengthened Local Govt. Substitute ‘Voice’ for Hierarchical Control – this will take time to develop fully. Move Regulation and Monitoring of Local Govts. from case-bycase Discretion towards Rules & Outcome based approach.

NEP, RELEVANCE OF FISCAL POLICY – 2007 (IIPM, Hyderabad) COPYRIGHTED COPYRIGHTE

www.indiabudget.nic.in   www.indiastat.com   www.wikipedia.org   www.google.com   www.googlescholar.com   RBI Report 2007   http://fincomindia.nic.in   http://planningcommission.nic.in

http://econstats.com   http://www.censusindia.gov.in   http://www.indexmundi.com   www.worldbank.org.in   www.rediff.com   http://www.hinduonnet.com/fline/fl1718   http://imf.org/external/np/seminars/eng

NEP, RELEVANCE OF FISCAL POLICY – 2007 (IIPM, Hyderabad) COPYRIGHTED COPYRIGHTE

NEP, RELEVANCE OF FISCAL POLICY – 2007 (IIPM, Hyderabad) COPYRIGHTED COPYRIGHTE

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