INDIA NEEDS FISCAL CONVERGENCE

INDIA NEEDS FISCAL CONVERGENCE - Dr.Debesh Bhowmik

International Journal of Multidisciplinary Research,Vol-I,Issue-4,July 2012.,20-25

Summary.

India  is structurally a fiscal deficit country.Some states crossed more than 10% of GDP as fiscal deficit.There is no convergence of fiscal deficit of the states.Very less progress had been done during the planning period to reduce fiscal deficit.The semilog linear trend line said that India reduced fiscal deficit at the rate of 1.45% per year during 1990-91-2012-13.The Beta and Sigma hypothesis tests confirmed that the states' fiscal deficit suffers from convergence.That's why fiscal policy destabilised BOP equilibrium mechanism,face asymmetric shocks of exchange rate,current account balance,inflation rate, and foreign capital inflows.