ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

Articles by Lekha ChakrabortySubscribe to Lekha Chakraborty

COVID-19 Economic Stimulus and State-level Performance of Power Distribution Companies

As part of the COVID-19 economic stimulus package, the Government of India increased the borrowing limit of the states from 3% to 5% of the gross state domestic product. The power sector reform at the state level is one of the criteria to avail this extra borrowing. The efficiency parameters of the power sector are analysed here, and it is observed that there are statewise differentials in the financial and operational parameters. The average aggregate technical and commercial losses that should have been 15% by 2018–19, presently, on average, stand at 26.15%. The average cost of supply–average revenue realised has also widened. The operational parameters indicate widening inefficiencies across states in the power infrastructure.

Mainstreaming Climate Change Commitments through Finance Commissions

This analysis suggests that climate change criterion in the intergovernmental fiscal transfer mechanism in India is a significant step to incentivise the conservation of forests. However, the macropolicy channel of this link is through the public expenditure priorities related to climate change commitments by the state governments.

Union Budget 2021–22

High deficit has no fiscal costs if it can be substantiated with increased public investment or “output gap” reduction. When the monetary policy stance has limitations in triggering growth through liquidity infusion and the status quo policy rates, “fiscal dominance” is crucial for sustained growth recovery.

Fifteenth Finance Commission Award for 2020–21

The first report of the Fifteenth Finance Commission has allayed many fears that arose after the notification of the terms of reference of the commission. The main report for the period 2021–22 to 2025–26 will have to factor in the devastating impact of COVID-19 on the economy and provide adequate fiscal space to the states for socio-economic response and recovery.

Impact of the Negative Interest Rate Policy on Emerging Asian Markets

In the last few years, several central banks have implemented negative interest rate policies to boost the domestic economy. However, such policies may have some unintended consequences for the emerging Asian markets. The analysis provides an assessment of the domestic and global implications of negative interest rate policy and how it differs from that of quantitative easing. It shows that the impact of nirp is heterogeneous, with differential impacts for big Asian economies (India and Indonesia) and small trade-dependent economies (Hong Kong, Philippines, South Korea, Singapore and Thailand). Quantitative easing, on the other hand, has no significant impact on inflation but nominal gdp growth declines in eams. The currency appreciates and exports decline. The impact is much more severe in big emerging economies.

Covid-19 and Macroeconomic Uncertainty

The macroeconomic uncertainty created by COVID-19 is hard to measure. The situation demands simultaneous policy intervention in terms of public health infrastructure and livelihood. Along with the global community, India too has announced its initial dose of fiscal and monetary policy responses. However, more fiscal–monetary policy coordination is required to scale up the policy response to the emerging crisis. Innovative sources of financing the deficit, including money financing of fiscal programmes, a variant of “helicopter money,” need to be explored.

Fiscal Consolidation Ex Post the ‘Escape Clause’

Launching an “excessive deficit procedure” in India is inevitable for growth revival. This is crucial, especially when there is considerable ambiguity about why the “escape clause” was invoked in the Union Budget 2020: whether to meet the shortfall in tax revenue emanating from the unanticipated fiscal outcomes of structural reforms, or to boost the capital formation in the economy.

Indian Fiscal Federalism at the Crossroads

The abolition of the Planning Commission, the creation of the NITI Aayog, the constitutional amendment to introduce the goods and services tax, the establishment of the goods and services tax council, and the historically high tax devolution to the states based on the Fourteenth Finance Commission have changed the union–state fiscal relations fundamentally. The changing contours of union–state fiscal relations discussed in the context of the release of a recent book Indian Fiscal Federalism by Y V Reddy and G R Reddy are presented here.

Challenges to Indian Fiscal Federalism

The state of cooperative federalism in India is analysed by focusing on the trends in vertical fiscal imbalances between the centre and the states, the impact of Fiscal Responsibility and Budget Management acts on the fiscal space of the states, the implications of the Terms of Reference of the Fifteenth Finance Commission, and the need for empowering local governments in the context of centre–state relations.

Will UDAY Brighten Up Rajasthan’s Finances?

Fiscal prudence in most countries, including India, is focused on general government deficit. Though there is strong merit in focusing on the public sector borrowing requirement (PSBR) to judge fiscal health, paucity of data and its timeliness always prevented having a consolidated view of public...

New FRBM Framework

The structural inability to control revenue deficits needs different solutions from the usual argument that the utilisation of government expenditure is inefficient and that the government should spend less. It is time to relook at the way the union government spends.

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