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Social capital and fiscal performance in India during 1991-2012

Author

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  • Soumyananda Dinda

Abstract

Purpose - The purpose of this paper is to examine the relationship between social capital and fiscal performance using provincial sub-national state-level data in India during 1991-2012. Fiscal performance in India is based on social trust on fiscal institutions that emphasizes mainly social need for economic development. Design/methodology/approach - People participation in public affairs or simply vote turnover in general election in India is taken to measure social trust on fiscal institution. Applying principal component analysis, the author constructs social capital index and examines the said relation also. Models are estimated using panel data techniques. Findings - Strong social capital reduces fiscal deficits. As one percent vote turnover rate rises, fiscal deficit reduces by 2.6-2.8 percent during 1991-2012. The empirical findings suggest that social capital indirectly controls the fiscal performance of the elected government. The results are robust to a number of control variables. Originality/value - The strong political trust is established through high turnover rate and vote share in the election for formation of government that creates the platform for sound fiscal policy decisions.

Suggested Citation

  • Soumyananda Dinda, 2018. "Social capital and fiscal performance in India during 1991-2012," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 45(1), pages 187-204, January.
    • Handle: RePEc:eme:ijsepp:ijse-12-2016-0378
    DOI: 10.1108/IJSE-12-2016-0378
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    More about this item

    Keywords

    Fiscal deficit; Vote turnover; Civil society; Cooperation; Collective action; Fiscal performance; Social capital; Trust; Principal component analysis (PCA); Panel data analysis; H3; O1; Z;
    All these keywords.

    JEL classification:

    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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