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Fiscal Reforms, Fiscal Rule, and Development Spending: How Indian States Have Performed?
Author(s) -
Chakraborty Pinaki,
Dash Bharatee Bhusana
Publication year - 2017
Publication title -
public budgeting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.694
H-Index - 30
eISSN - 1540-5850
pISSN - 0275-1100
DOI - 10.1111/pbaf.12161
Subject(s) - fiscal union , economics , fiscal imbalance , fiscal policy , state (computer science) , legislation , balance (ability) , fiscal federalism , fiscal adjustment , macroeconomics , economic policy , political science , decentralization , market economy , medicine , algorithm , computer science , physical medicine and rehabilitation , law
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.