A Macro-Fiscal Modeling Framework for Forecasting and Policy ...

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On the other hand, during 1950-51 to 1980-81, the tax-GDP ratio of states together increased from 2.3 percent to about 5 percent while the primary revenue expenditure-GDP ratio from about 3.9 percent to about 9.7 percent. In 1991-92, the former rose to 6 percent and the latter to a little above 12 percent. After that they are more or less stagnated with minor variations in some years (Chart 1.9). The total taxes raised by the centre and states together and the total primary revenue expenditures incurred by the centre and states moved together till 1980-81 with a little variation. After that year, the primary revenue expenditure of the states have grown at a fairly fast pace. The gap between primary revenue expenditure-GDP ratio and the tax-GDP ratio was about 2 percentage points through out nineties and early years of this decade. Only in 2005-06 and 2006-07, the tax-GDP ratio was slightly higher than the primary revenue expenditure-GDP ratio (Chart 1.10). Chart 1.9: Primary Revenue Expenditure and Tax Revenues of States as % of GDP 14 12 10 8 6 4 2 0 Primary Revenue Expenditure Tax Revenues 19
Chart 1.10: Primary Revenue Expenditure and Tax Revenues of both Centre and States as % of GDP 25 20 15 10 5 0 Primary Revenue Expenditure Tax Revenues Starting from mid eighties, the fiscal situation remained quite unsatisfactory until the mid-years of the current decade. The combined revenue deficit increased from about 2 percent of GDP in 1985-86 to 7.5 percent in 2002-03. After that it started declining and reached 2.25 percent in 2006-07. As far as revenue deficit of states is concerned, it exceeded one percent of GDP only during 1996-97 to 2004-05. It is only the centre‟s revenue deficit which contributes significantly to the combined revenue deficit from early eighties (Chart 1.11). 20
Page 1 and 2: MONOGRAPH 22/2012 A Macro-Fiscal Mo
Page 3 and 4: MONOGRAPH 22/2012 May 2012 Rs.200/-
Page 5 and 6: Overview and Rationale EXECUTIVE SU
Page 7 and 8: centre‟s and states‟ (taken col
Page 9 and 10: to nearly fully replicate the growt
Page 11 and 12: sustained stimulus to the economy c
Page 13 and 14: CONTENTS Preface Acknowledgements E
Page 15 and 16: 5.4 Selected Tax Revenues: Summary
Page 18 and 19: Chapter 1 1.1 Background INTRODUCTI
Page 20 and 21: elativities or shares of provinces
Page 22 and 23: (VECM) as well as structural cointe
Page 24 and 25: (a) First Phase: Models up to Sixti
Page 26 and 27: short-term variations around long-t
Page 28 and 29: investment) have separate equations
Page 30 and 31: (i) Output Growth The output growth
Page 32 and 33: Chart 1.3: Private Consumption and
Page 34 and 35: Chart 1.6: Interest Rates: Long-ter
Page 38 and 39: Chart 1.11: Revenue Deficits as % o
Page 40: 1.6 Summary In this Chapter we have
Page 43 and 44: (1987). Many economists thought tha
Page 45 and 46: equation, the trend and structural
Page 47 and 48: Papell (1997), and Morimune and Nak
Page 49 and 50: F T ( 1 , 2 , ...., k ; q) = (1/T)
Page 51 and 52: 7. Hatekar-Dongre (2005) argue that
Page 53 and 54: we need to test whether the time se
Page 55 and 56: used to select the optimal number o
Page 57 and 58: 83, and 1997-98. KRS has three brea
Page 59 and 60: IDR has four break dates in the yea
Page 61 and 62: Structural Variables Names Break Da
Page 63 and 64: The real and external sectors are l
Page 65 and 66: Government investment expenditure i
Page 67 and 68: compensation of employees to the re
Page 69 and 70: 36. Union Excise Duties: LUDR = f {
Page 71 and 72: CBKE = CBFDO+CBNDKR-CBRD 64. Combin
Page 73 and 74: (b) Exogenous Variables Exogenous v
Page 75 and 76: interest payments; it arises mainly
Page 77 and 78: the structural break dummy D81, all
Page 79 and 80: eak dummies (D64, D88 and D99) for
Page 81 and 82: Table 4.5: Industrial Output Depend
Page 83 and 84: Table 4.7: Investment in Agricultur
Page 85 and 86: 4.5 External Sector Demand for Impo
Page 87 and 88:
Table 4.12: Demand for Broad Money
Page 89 and 90:
Table 4.14: Long Term Interest Rate
Page 91 and 92:
Table 4.16: Implicit Price Deflator
Page 93 and 94:
Table 4.18 Unit Value of Exports De
Page 95 and 96:
Table 4.20: Income Tax Revenue Depe
Page 97 and 98:
Table 4.22: Union Excise Duties Dep
Page 99 and 100:
Table 4.24: Central Effective Inter
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Table 4.26: State Other Indirect Ta
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Table 4.28: Testing for First Order
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larger the error, the larger will b
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c. Limitations of Comparisons betwe
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The terms thus provide information
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5.3 Investment Variables Table 5.1
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all these variables accurately. The
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Chapter 6 FORECASTS: BASE AND REFOR
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a. Macro Indicators The average gro
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Year Income Tax (ITR) Table 6.4: Ce
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Year Revenue Expenditures (CRE) Tab
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Year Table 6.8: State Finances: Rev
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throughout the period 2010-11 to 20
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Year Table 6.12: Combined Finances:
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On the state finances, there will o
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Year Table 6.16: Combined Finances:
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Year Table 6.17: Forecasts of Macro
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Year Table 6.19: State Finances: De
Page 138:
provided for in order to stimulate
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In order to identify whether the In
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with a balance of payment identity.
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model-forecasts are taken as condit
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Table 7.3: Forecasts of Major Fisca
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In Scenario 2, the following are th
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Commission. This is because of the
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Balakrishnan, P and K. Pushpagandan
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Dickey, D.A. and W.A. Fuller (1979)
Page 157 and 158:
Krishnamurty, K. (1984), “Macroec
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Pandit, V. and B.B. Bhattacharya (1
Page 161 and 162:
Yule, G.U. (1927), “On a Method o
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No. Name Description Unit Source (B
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No. Name Description Unit Source (B
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Exogenous Variables Appendix A3.2 L
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Appendix A4.1 TESTING FOR SERIAL CO
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11 Dependent Variable: RSLEXPR Samp
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21 Dependent Variable: RSLSSR Sampl
Page 175 and 176:
1. Variables YR and YN Appendix A5.
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3. Variables RSN and RLN Years RSN
Page 179 and 180:
5. Variables ITR and CPTR Years ITR
Page 181 and 182:
7. Variables CRR and CRE Years CRR
Page 183 and 184:
9. Variables SRR and SRE Years SRR
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11. Variable YSR Years YSR Forecast
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for 3 years is based on projection
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12. SS: Share of States in Centre
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Appendix A6.2 FORECAST FOR SELECTED
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Years IDR IG CBOBB CBFDO IIR IMPR 2
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Years SKE SOITR SRD SRE SRR SSR 200
Page 197:
MSE Monographs * Monograph 9/2010 F
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