Dissecting India's Fiscal Ecosystem: A Thorough Investigation Of The Central Government's Financial Flow And Obligations

Abstract

This study examines India's fiscal dynamics, highlighting the interplay between strong economic policies and challenges. It acknowledges the growth in revenue receipts and the significant impact of interest payments on debt-laden expenditures. The fiscal landscape shifted notably in 2020-21, primarily due to the COVID-19 pandemic, increasing borrowings and subsidies. Despite tax revenues being the main income source, there's room for diversification with non-tax revenues. The study also notes diverging trends in primary and fiscal deficits, signalling deeper fiscal issues. It urges policymakers to consider the substantial fiscal gap and debt burden when planning the budget. This analysis underscores the need for balanced economic strategies to maintain India's fiscal stability.