Generating Fiscal Space: A Framework, with Applications for India By Mukul Asher, Professorial Fellow, LKYSPP National University of Singapore, Prepared for a seminar at Mumbai University December16, 2015

A Framework For Analyzing Generating Fiscal Space Generating Fiscal Space Enhancing Rate of Growth and broadening its base Improving Revenue performance Better Expenditure Management to obtain value for money Use growth Drivers, including knowledge generation, application& diffusion more competently, & technology adaptation Use Demographic Trends For growth Improve overall Productivity Trends Conventional SourcesNon-Conventional Sources Reform Procurement Practices including in manpower Reforming subsidies and tax expenditure with emphasis on efficiency societal outcome rather than spending. Broaden tax base, Use sunset clause Reform Public enterprises obtain better utilization resources interested to them Tax Reforms to broaden base, Improve compliance, reduce administrative compliance costs, preserve tax base and minimize tax- base shifting. Technology enabled instruments, e.g. new IT tool to check PAN transactions history; re- negotiating double taxation treaty with Mauritius etc. taxation treaty with Use government assets(e-g-land mining assets) more productively using post offices for telecom towards is a good example Appropriate for set policies cost recovery and user charges Address willingness to charge issues Reform and use Capital Markets, e-g for state and municipal bonds, monetizing housing, gold & other such assets Better use of Regulatory charges and levies Improve Policy coherence and organizational Co-ordination to make real resource saving in transaction costs. Better Align existing expenditure allocation with society’s long-term priorities Complementary reforms in such sectors as labour markets, regulatory regimes Improve Debt management including managing difference between ”sustainable”,actual debt levels Financial Transaction Tax (FTT) Remittances from abroad Source: Constructed by Asher December, 2015 (revised) Use Public Sector current and capital expenditure to crowd- in Private sector domestic and foreign investment State Electricity Board Reforms Improve treasury Management Regulatory levies and setting procedure to channel surplus(in agreed manner) of regulatory agencies with the Consolidated fund of India. This can also be done at each State level