I. Introduction

II. Macroeconomic Theory

III. Fiscal-Monetary Co-ordination: International Experiences

IV. Global Financial Crisis and Fiscal-Monetary Co-ordination

V. Concluding Observations

CHAPTER 3: FISCAL- MONETARY CO-ORDINATION IN INDIA: AN ASSESSMENT

I. Introduction

II. Fiscal Imperatives on Monetary Policy

III. Interaction between fiscal and monetary policy under different regimes

IV. Fiscal and Monetary Policy Co-ordination in Inflation Management

V. Cyclicality of government spending

VI. Debt-Deficit Dynamics and Monetary Management

VII. Concluding Observations

CHAPTER 4: FISCAL OPERATIONS AND THE RESERVE BANK’S BALANCE SHEET

I. Introduction

II. Fiscal Policy and the Central Bank’s Balance Sheet

III. The Reserve Bank’s Balance Sheet and Fiscal Operations

IV. Fiscal-Monetary Interface and the Reserve Bank’s Balance Sheet: Some Issues

V. Global Financial Crisis and the Reserve Bank’s Balance Sheet

VI. Concluding Observations

I. Introduction

II. Fiscal-Monetary Co-ordination: Outlook for the Medium Term

III. Institutional Arrangements Relating to Debt and Cash Management – Quo Vadis?

IV. Concluding Observations

II.1

Fiscal Concerns and Challenges for Monetary Policy

II.2

Financial Stability Arrangements in the Post-Crisis Period

III.1

Monetisation of Debt: Conceptual Debate

III.2

Monetisation of Debt in India

III.3

Monetary and Fiscal Policy Interactions and the Game of Chicken

III.4

Inflation and Government Finances: Is it a self-perpetuating cycle in India?

III.5

Debt-Deficit Dynamics and Monetary Management: Empirical Evidence

IV.1

Emergence of Large Surpluses in Government Cash Balances

IV.2

Central Bank Capital: Issues and Perspectives

IV.3

Performance of Monetary Targets (pre-1998) and Indicative Projections (post-1998) during the Multiple Indicator Approach period

IV.4

Seigniorage and Central Bank Profits

IV.5

Costs of Sterilisation in India

IV.6

Unconventional Monetary Policy Measures and Central Bank Balance Sheets in Advanced Economies  

V.1

Evolution of Views on Institutional Arrangements for the Separation of Debt and Monetary Management in India

V.2

Central Government Cash Management in India

V.3

Conflicts between Government Cash Management and Liquidity Management

III.1

High fiscal deficits and large open market purchases amidst elevated inflation at times adding to monetary pressures

III.2

Weighted Contribution of Food and Fuel to Overall Inflation

III.3

Inflation Volatility and Changing Contributions

III.4

Product-wise under-recovery in Fuel

III.5

Movement in International and Domestic Prices of Fuel

III.6

Fiscal control on Fuel Inflation

III.7

Fertiliser Prices and Subsidy

III.8

Growth Rates of Government Spending and GDP

III.9

Cyclical components of GDP and GFCE

III.10

Cyclical components of GFCE-to-GDP Ratio and GDP

III.11

Public Expenditures increasingly financed by borrowings

III.12

Rising interest payments with reversal in primary revenue balance

III.13

External financing of GFD remains limited

IV.1

Reserve Bank Balance Sheet Size

IV.2

Transfers to the Reserves and to the Government

IV.3

Trends in Seigniorage

IV.4

Impact of Capital Flows on the Reserve Bank’s Balance Sheet

V.1

Key Deficit Indicators of the Central Government

V.2

Sources of Reserve Money

V.3

Sources of Broad Money

V.4

Growth Rate, Inflation Rate and Call Rate

V.5

Parameter Stability Tests

LIST OF TABLES

3.1

Pair-wise Granger Causality Tests Between Food, Fuel and Core Inflation

3.2

Market borrowing, deficits, reserve money and Inflation

3.3

Bounds Test for Co-integration between Government Debt and Reserve Money

3.4

Error Correction Model for Reserve Money

4.1

A Stylised Central Bank Balance Sheet

4.2

Fiscal Responsibility Laws in Select Countries - Main Features

4.3

Evolution of the Reserve Bank’s Balance Sheet - Select Indicators

4.4

Government Transactions in Reserve Bank’s Balance Sheet

4.5

Reserve Bank’s Capital Base

4.6

Net Market Borrowings of Central Government - Projected versus Actual

4.7

Quasi-fiscal Costs arising from Exchange Guarantee for FCNR(A) Scheme

5.1

Granger Causality Test