The Indian Journal of Labour Economics

, Volume 61, Issue 1, pp 105–130 | Cite as

Fiscal Consolidation, Growth and Employment: International Evidence and Implications for India

  • Iyanatul IslamEmail author


The paper argues that many national governments, including the one in India, focus on insufficiently robust point estimates pertaining to specific debt/deficit thresholds that create a fiscal consolidation bias. This is costly in terms of output and employment losses. The paper points out that labour market reforms to support fiscal consolidation are often advocated by international agencies, but one should not ignore the high short-run costs of such reforms. These lessons of international experience are highly pertinent to India as it is poised to implement a new fiscal framework. The paper emphasizes that India faces the major challenge of providing productive and durable jobs for its burgeoning work force while ensuring improved social indicators. Adequate and sustainable financing of such critical development needs ought to be at the centre of any fiscal framework.


Fiscal consolidation Fiscal rules Structural reforms Growth Employment FRBM Review Committee 



The author gratefully acknowledges helpful and incisive comments received from Sher Verick and Rizwanul Islam. The standard disclaimer applies: the author bears sole responsibility for any remaining errors and omissions.


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Copyright information

© Indian Society of Labour Economics 2018

Authors and Affiliations

  1. 1.Griffith Asia InstituteGriffith University, Nathan campusBrisbaneAustralia

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