Investigating the issue of fiscal sustainability in India: a state level analysis

Abstract

This article offers an analysis of the dilemma confronting India currently with fiscal sustainability. The goal of this analysis is to develop a method to determine and analyse the fiscal sustainability component. To accomplish this, the current study deduced a fiscal sustainability measure whose nomenclature was defined as 'sustainability gap'. This approximation was calculated for 28 Indian states with the exception of Telangana. The present analysis is performed using the secondary information provided by the respective website of the state government in view of the 2006-2007 to 2017-2018 time frames. The states are grouped into three divisions on the basis of 'sustainability gap' values: good performer, average performer and poor performer. The current manuscript stresses that Indian states must concentrate on reducing their public debt if they wish to shift towards fiscal sustainability. The time has come for us to engage the private sector through public-private collaborations (PPPs).