Vol. 4 No. 3 (2023): Indian Public Policy Review

India has a long-standing problem with data gaps, which have serious implications for fiscal policy and economic growth. The lack of transparency around off-budget borrowing is a major example of data gaps in India, and has been persistent across the Union and state levels. The paper examines the regulatory framework and institutional gaps surrounding off-budget borrowings in India. It attempts to build a comprehensive understanding on the methods used for such borrowings and ascertains their true extent. The paper relies primarily on data from CAG audits of the Union and state finance accounts. The paper welcomes the Union's recent actions to make transparent and begin to do away with the use of off-budget borrowings. However, more actions are needed to close this form of data gap, at the Union and the states and, meanwhile, the Union should focus on ensuring the full reporting of these borrowings. This calls for an improvement in the coverage, timeliness, quality and integrity of fiscal reporting, in line with international standards. Eventually, that could be best achieved with a comprehensive and consolidated PFM law for the Union and the states.

This study examines the sustainability and the threshold level of public debt of the Centre and all State Governments in India, using the latest data from 1990-91 to 2020-21, and using statistical methods and threshold regression method. The results suggest that the current levels of public debt of both the Centre and all States are unsustainable, and the debt sustainability threshold is about 40% for the Centre and 22% for all States. There is a greater need for the Centre and all States to control their debt levels as they are currently growth reducing. The simulation exercises based on the debt dynamics suggest that the Indian economy (nominal GDP) should grow at 12%, and the fiscal deficit target should be 2% each for the Centre and all States from 2023-24 onwards, for the Centre to attain the debt sustainability target before 2027-28 and all States to do so in 2030-31. The relevant policy strategy for all governments is revenue augmentation and containing public expenditures, including unproductive subsidies.

Abstract: Industrial Revolution 4.0 (IR4.0) has many opportunities and important challenges for developing countries such as India. This article takes stock of India’s opportunities in harnessing IR4.0 for inclusive development, and the challenges that the revolution presents before the country. It argues that with India’s extant capabilities in ICT software development, a youthful demography, and skill development potential, the country can be at the centre of IR4.0 -- becoming the world’s skill or talent capital, besides leveraging the potential of the new technologies for closing development gaps. It also summarizes some policy lessons for tapping the potential of India in IR4.0; these include, among others, the need to quickly transform the educational system to make it fit-for-purpose for the digital revolution, step up enterprise-level innovative activity, facilitate the adoption of relevant technologies by MSMEs, closing the digital divide, and evolving a new architecture for social protection designed to protect displaced workers, as well as gig economy workers.

When Rule 3 of the Draft Code on Wages (Central) Rules, 2020 (hereafter referred to as ‘Draft Rules’) was notified, the shortcomings of Rule 3(1) in the Draft were highlighted by the discussion paper published by the International Labour Organisation and the recommendations made by Oxfam. This paper argues that despite its shortcomings, Rule 3(1) in the Draft Rules is still an important milestone for the progressive realisation of workers’ welfare in India, because it is the first time that the Union Government has shown normative commitment towards ratifying the recommendations of the 15th Indian Labour Conference, 1957. The benefit of calculating the minimum wage as per Rule 3(1) of the Draft Rules, which is in tune with the 15th Indian Labour Conference recommendations, would be that it will ensure that the minimum wages will be set at a quantum higher than usually set by the Committees and Wage Boards appointed by the Union Governments throughout history. Therefore, while it is necessary that the civil society organisations eventually push for a better version of Rule 3(1) in the Draft Rules, it is equally important that they act as watchdogs to ensure full-fledged ratification and implementation of the 15th ILC norms in Rule 3(1) in the Draft Code Rules in the first place.

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