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

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Financing Gross Capital Formation in Indian Public Sector-A Quantitative Model

Financing Gross Capital Formation in Indian Public Sector A Quantitative Model Barnett R Rubin The model presented in this paper shows that, in recovering from the recession of the mid-sixties, the Indian state changed its method of mobilising resources. There was earlier an ongoing shift of savings into the organised sectors (private corporate and especially the public sector), with a quickly increasing mobilisation of savings through taxation. Afterwards the public sector relied increasingly on an expanded, nationalised banking system to mobilise household sector saving. The rising political pressures of populism and broader participation prevented the government from rising, or even constant, proportions of the new revenues it mobilised mainly through indirect taxes, The use of public sector enterprises as sources of patronage politicised management and made them a drag on the public sector finances as a whole.

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