Fiscal Reforms, Fiscal Rule, and Development Spending: How Indian States Have Performed?

23 Pages Posted: 5 Dec 2017

See all articles by Pinaki Chakraborty

Pinaki Chakraborty

National Institute of Public Finance and Policy; Bard College - The Levy Economics Institute

Bharatee Bhusana Dash

National Institute of Public Finance & Policy

Date Written: Winter 2017

Abstract

In the last decade, fiscal rule was introduced to institutionalize rule‐based fiscal control in India by enacting Fiscal Responsibility Legislation by the Union and state governments. Using a 14 year data set from 2000–01 to 2013–14, spread across 14 major states, this paper examines the impacts of fiscal rule on fiscal balance. Our findings confirm that the introduction of fiscal rule resulted in reduction in fiscal imbalance. The paper also found that, to comply with the deficit targets set by the fiscal rule, states resorted to spending cuts, primarily the discretionary development expenditures.

Suggested Citation

Chakraborty, Pinaki and Dash, Bharatee Bhusana, Fiscal Reforms, Fiscal Rule, and Development Spending: How Indian States Have Performed? (Winter 2017). Public Budgeting & Finance, Vol. 37, Issue 4, pp. 111-133, 2017. Available at SSRN: https://ssrn.com/abstract=3081271 or http://dx.doi.org/10.1111/pbaf.12161

Pinaki Chakraborty (Contact Author)

National Institute of Public Finance and Policy ( email )

18/2, Satsang Vihar Marg
New Delhi, 110067
India

Bard College - The Levy Economics Institute ( email )

Blithewood
Annandale-on-Hudson, NY 12504-5000

Bharatee Bhusana Dash

National Institute of Public Finance & Policy

New Delhi
India

Register to save articles to
your library

Register

Paper statistics

Downloads
0
Abstract Views
68
PlumX Metrics