Reimagining India’s Fiscal Architecture

Fiscal credibility in India has increased markedly in recent years underpinned by improved transparency (off-budget liabilities coming on budget), conservativeness (in the budgeting of revenues) and marksmanship (in the attainment of deficit targets). Yet, like around the world, India is left with higher public debt levels post-pandemic, and, despite ongoing fiscal consolidation, Combined Debt/GDP again inched up last year. We therefore propose a new, post-pandemic fiscal architecture built on five pillars that is anchored in debt and is holistic (encompassing centre and states), dynamic (responsive to changing macro conditions and market signals), sustainable and conservative -- so as to help create fiscal space to respond to future shocks.