Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/161437 
Authors: 
Year of Publication: 
2016
Series/Report no.: 
ADBI Working Paper No. 557
Publisher: 
Asian Development Bank Institute (ADBI), Tokyo
Abstract: 
Despite the initiatives of the Finance Commission of India, fiscal performance has been deteriorating and increasingly diverging across Indian states. Given that the state governments are endowed with expenditure autonomy, this paper investigates whether the composition of expenditure of the subnational governments has an impact on the degree of indebtedness. A panel analysis for the 17 non-special category states over 1980-2013 indicates that apart from the budget structure, the state-specific factors affecting fiscal performance plays an important role in government borrowing. Curiously enough, government borrowing is more responsive to revenue expenditure than capital outlay and has more growth-augmenting effect through revenue expenditure.
Subjects: 
fiscal deficit
subnational performance
local government indebtedness
India
JEL: 
H72
H74
H77
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Working Paper

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