Governance of Fiscal Deficit in India

Das, Rituparna (2006): Governance of Fiscal Deficit in India. Published in: Published as Chapter in the 'Book Research Methodology in Social Sciences and Management: Models on Indian Issues', ISBN-13: 978-3639295467 (24 September 2010): pp. 15-30.

Abstract

Indian legal frame compels the central bank of the country to increase money supply through financing fiscal deficits and thus fuels inflation, but, the liberalization of the economy has neutralized such inflationary potential. This chapter shows that the influence of such deficit financing on money stock became virtually nil during the post reform period, rather foreign exchange assets emerged as a powerful determinant of money stock.

• Item Type: MPRA Paper
• Language: English
• Keywords: Net Foreign Exchange Assets, Vector Autoregression
• Subjects: E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook; E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E62 - Fiscal Policy

References

1. A Soumya and K. N. Murty, 2005. Macroeconomic Changes in Selected Monetary and Fiscal Variables, In B. B. Bhattacharya and A. Mitra (eds.), Studies in Macroeconomics and Welfare, Academic Foundation, New Delhi. 89-115

2. Balwant Singh and Sushila Augustine, 2005. “Optimizing Growth and Inflation”, In B. B. Bhattacharya and A. Mitra (eds.), Studies in Macroeconomics and Welfare, Academic Foundation, New Delhi.171-98

3. C Rangrajan and M. S. Mohanty, 2004. “Fiscal Deficit, External Balance and Monetary Growth - A Study of Indian Economy”, In C Rangarajan (ed.), Select Essays on Indian Economy, Academic Foundation, New Delhi. 65-128

4. Damodar Gujarati, 2004, Basic Econometrics, Tata McGraw-Hill, New Delhi, 4th edition, pp 848-852

5. M. Ramachandran, 2000, “Fiscal Deficit, RBI Autonomy and Monetary Management”, www.epw.org.in, August 26-September 2

6. N. L Mitra and Rakesh Kumar, 2000. “Constitutional response to Good Governance and Macro-economic Management”, Journal of Indian Law Institute Volume 42 No. 2-4, April-December, 335-394

7. Reserve Bank of India, Handbook of Statistics on Indian Economy, (Reserve Bank of India, 2004-05) Tables 172 and 173, 305-314

8. S Johansen, 1988. Statistical Analysis of Cointegration Vectors, Journal of Economic Dynamics and Control Volume 12, 231-254

9. Y. S. R. Sarma. “Government Deficit, Money Supply and Inflation in India”, RBI Occasional Papers Volume 2, No. 1 (1982) 56-67