NATIONAL ECONOMIC PLANNING

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 Picture 3

Substantiating the Fiscal Oversight

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

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

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 E

E
=
Y
+ G
) +I
( Y -T
C
E=

Y
Income, Output
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NEP, RELEVANCE OF FISCAL POLICY – 2007 (IIPM, Hyderabad) COPYRIGHTED
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 STABILIZE BY CONTROL

DEVELOP BY REGULATION
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 GROW TO DEVELOP

BACK TO SQUARE ONE – DEVELOP BY HIGH REGULATION

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Ohh.. GOD ‘S WHAT’S WRONG WITH THE POLICIES –
ECONOMICAL CRISIS

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ADOPT WHAT OTHERS DID – (No Other way Left)
BUT STILL FOLLOW OWN STYLE

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INDIA IS ALREADY CONFUSED DO WHATEVER YOU WANT
TO DO

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 • 12 TH
Largest Economy in the World as per GDP in US DOLLARS

•3 RD
Largest Economy in the World as per GDP in US DOLLAR
(PURCHASING POWER PARITY)

•2 ND
Fast Growing MAJOR ECONOMY @ 9.2 %

• TRILLION DOLLAR ECONOMY.

* Sources : Worldbank.org

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 * Sources : RBI YEAR REPORT 2006 - 2007

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 * Sources : RBI YEAR REPORT 2006 - 2007

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 * Sources : RBI YEAR REPORT 2006 - 2007

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 * Sources : RBI YEAR REPORT 2006 - 2007

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 * Sources : RBI YEAR REPORT 2006 - 2007

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 * Sources : CENSUS REPORT 2001

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 * Sources : CENSUS REPORT 2001

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 * Sources : RBI YEAR REPORT 2006 - 2007

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 * Sources : RBI YEAR REPORT 2006 - 2007

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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.

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• India is Ranked the 6 th
Country in the World in Terms of Satellite
Launches.

Of the Fortune 500 companies, 220 outsource their Software-

related 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).

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 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
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• 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.
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• 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’)
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The Quality of Public Expenditures has Deteriorated
– can rationalize Govt. through

Internal Restructuring

Privatization

Subsidy Reduction

Better Management of Pay and Pensions.

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Interest on Loans may be Subsidized.

Loans may be Rescheduled.

Loan Guarantees can Serve as a Subsidy also.

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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.

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• Several other Simultaneous Developments Heighten the
Challenges:

• Major Local Government Reform.

• Liberalization and move away from Govt. Intervention,

including Re-evaluation of Govt. Economic Planning.

• Red Tape & Corruption.

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 Year Center States Consolidated
Total Revenue Primary
1990-91 6.6 3.3 9.4 4.2 5.0
1991-92 4.7 2.9 7.0 3.4 2.3
1992-93 4.8 2.8 7.0 3.2 2.1
1993-94 6.4 2.4 8.3 4.3 3.3
1994-95 4.7 2.7 7.1 3.7 1.9
1995-96 4.2 2.6 6.5 3.2 1.6
1996-97 4.1 2.7 6.4 3.6 1.3
1997-98 4.8 2.9 7.3 4.1 2.1
1998-99 5.1 4.2 9.0 6.4 3.7
1999-00 5.4 4.6 9.6 6.3 3.9
2000-01 5.7 4.3 9.8 6.6 4.0
2001-02 6.1 4.2 9.9 6.9 3.7
2002-03 5.9 4.7 9.6 6.7 3.1
2003-04 4.5 4.4 8.5 5.8 2.1
2004-05 (RE)* 4.0 4.0 8.4 4.1 2.3
2005-06 (BE)** 4.1 3.1 7.7 3.4 1.8
2006-07 (BE) 3.8 n.a. n.a. n.a. n.a.
* Sources : RBI YEAR REPORT 2006 - 2007
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 YEAR DEBT (% OF
1990 – 1991 GDP)
49.8 %
1995 – 1996 46.7 %
2001 – 2002 56.8 %
2002 – 2003 61.0 %
2003 – 2004 61.1 %
2004 – 2005 61.8 %
2005 – 2006 60.7 %
2006 – 2007 59.0 %
2007(RE)
– 2008 56.* %
(BE)

* Sources : RBI YEAR REPORT 2006 - 2007

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 Years Per Capita Percentage Percentage Percentage Percentage
Transfers of transfers of transfers of transfers of transfers
(1993-94 to GDP to Central to State to State
Rupees) Revenues Revenues Expenditure
1975-76 198.2 3.67 31.80 38.64 44.80
1980-81 272.2 4.84 34.80 43.81 47.50
1985-86 381.0 5.55 40.98 45.62 46.42
1990-91 449.9 4.66 39.06 38.37 30.85
1995-96 450.8 4.28 36.53 38.61 31.07
1996-97 487.0 4.28 36.35 39.97 31.83
1997-98 578.0 4.86 43.66 44.91 35.33
1998-99 469.9 3.73 34.46 37.69 26.29
1999-00 504.1 3.80 32.62 36.46 25.05
2000-01 580.1 4.41 35.38 37.41 26.92
2001-02* 633.1 4.49 35.80 38.02 28.30

Note: * Revised estimates

Source: Indian Economic Statistics/ Public Finance Statistics. Ministry of Finance, Government of India

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• 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.

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• 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-by-

case Discretion towards Rules & Outcome based approach.

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www.indiabudget.nic.in http://econstats.com
   
www.indiastat.com http://www.censusindia.gov.in
   
www.wikipedia.org http://www.indexmundi.com
   
www.google.com www.worldbank.org.in
   
www.googlescholar.com www.rediff.com
   
RBI Report 2007 http://www.hinduonnet.com/fline/fl1718
   
http://fincomindia.nic.in http://imf.org/external/np/seminars/eng
 
http://planningcommission.nic.in

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