IDEAS home Printed from https://ideas.repec.org/a/sae/soueco/v15y2014i2p281-314.html
   My bibliography  Save this article

Regional Income Disparity and Government Intervention in India

Author

Listed:
  • Bharatee Bhusana Dash

Abstract

This study examines the relationship between the fiscal intervention of the government and regional income disparity in 14 major Indian states. The impact of decentralization on the regional disparity of these states is also examined. The findings suggest that both policy measures have reduced the level of regional disparity. This study has also investigated the impacts of policy measures on regional income disparity within the clusters of states of similar income levels. Results suggest that both types of policy interventions have reduced regional disparity in low-income states, whereas only fiscal intervention is found significant in reducing regional disparity in middle-income states. Surprisingly, no relation is found between regional disparity and the policy measures in high-income states.

Suggested Citation

  • Bharatee Bhusana Dash, 2014. "Regional Income Disparity and Government Intervention in India," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 15(2), pages 281-314, September.
    • Handle: RePEc:sae:soueco:v:15:y:2014:i:2:p:281-314
    DOI: 10.1177/1391561414548953
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/1391561414548953
    Download Restriction: no
    File URL: https://libkey.io/10.1177/1391561414548953?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei & Vishny, Robert, 1999. "The Quality of Government," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 15(1), pages 222-279, April.
    2. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64(5), pages 416-416.
    3. Alchian, Armen A & Demsetz, Harold, 1972. "Production , Information Costs, and Economic Organization," American Economic Review, American Economic Association, vol. 62(5), pages 777-795, December.
    4. Pranab Bardhan & Dilip Mookherjee (ed.), 2006. "Decentralization and Local Governance in Developing Countries: A Comparative Perspective," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262524546, December.
    5. Qian, Yingyi & Roland, Gerard, 1998. "Federalism and the Soft Budget Constraint," American Economic Review, American Economic Association, vol. 88(5), pages 1143-1162, December.
    6. Krueger, Anne O, 1990. "Government Failures in Development," Journal of Economic Perspectives, American Economic Association, vol. 4(3), pages 9-23, Summer.
    7. Wildasin, David E., 1989. "Interjurisdictional capital mobility: Fiscal externality and a corrective subsidy," Journal of Urban Economics, Elsevier, vol. 25(2), pages 193-212, March.
    8. Hongbin Cai & Daniel Treisman, 2005. "Does Competition for Capital Discipline Governments? Decentralization, Globalization, and Public Policy," American Economic Review, American Economic Association, vol. 95(3), pages 817-830, June.
    9. Jaime Bonet, 2006. "Fiscal decentralization and regional income disparities: evidence from the Colombian experience," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 40(3), pages 661-676, August.
    10. Oates, Wallace E., 1993. "Fiscal Decentralization and Economic Development," National Tax Journal, National Tax Association, vol. 46(2), pages 237-43, June.
    11. Andrés Rodríguez-Pose & Roberto Ezcurra, 2010. "Does decentralization matter for regional disparities? A cross-country analysis," Journal of Economic Geography, Oxford University Press, vol. 10(5), pages 619-644, September.
    12. Qiao, Baoyun & Martinez-Vazquez, Jorge & Xu, Yongsheng, 2008. "The tradeoff between growth and equity in decentralization policy: China's experience," Journal of Development Economics, Elsevier, vol. 86(1), pages 112-128, April.
    13. Guido Tabellini, 2005. "The Role of the State in Economic Development," Kyklos, Wiley Blackwell, vol. 58(2), pages 283-303, May.
    14. Wallace E. Oates & Wallace E. Oates, 2004. "Fiscal Decentralization and Economic Development," Chapters, in: Environmental Policy and Fiscal Federalism, chapter 21, pages 377-383, Edward Elgar Publishing.
    15. Jacob A. Mincer, 1974. "Introduction to "Schooling, Experience, and Earnings"," NBER Chapters, in: Schooling, Experience, and Earnings, pages 1-4, National Bureau of Economic Research, Inc.
    16. Bharatee Bhusana Dash & Sami Angara V. Raja, 2009. "Institutions and the quality of governance: an empirical study on interstate differences in economic development in India," Asia-Pacific Development Journal, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), vol. 16(1), pages 1-26, June.
    17. Brennan,Geoffrey & Buchanan,James M., 2006. "The Power to Tax," Cambridge Books, Cambridge University Press, number 9780521027922.
    18. Amaresh Bagchi, 2003. "Rethinking Federalism: Changing Power Relations Between the Center and the States," Publius: The Journal of Federalism, CSF Associates Inc., vol. 33(4), pages 21-42, Fall.
    19. Yingyi Qian & Barry R. Weingast, 1997. "Federalism as a Commitment to Reserving Market Incentives," Journal of Economic Perspectives, American Economic Association, vol. 11(4), pages 83-92, Fall.
    20. Ian R. Gordon & Paul C. Cheshire, 1998. "original: Territorial competition: Some lessons for policy," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 32(3), pages 321-346.
    21. Pranab K. Bardhan, 2000. "Understanding Underdevelopment: Challenges for Institutional Economics from the Point of View of Poor Countries," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 156(1), pages 216-216, March.
    22. Jacob A. Mincer, 1974. "Schooling and Earnings," NBER Chapters, in: Schooling, Experience, and Earnings, pages 41-63, National Bureau of Economic Research, Inc.
    23. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1, May.
    24. Vito Tanzi, 2005. "The Economic Role Of The State In The 21st Century," Cato Journal, Cato Journal, Cato Institute, vol. 25(3), pages 617-638, Fall.
    25. Datta-Chaudhuri, Mrinal, 1990. "Market Failure and Government Failure," Journal of Economic Perspectives, American Economic Association, vol. 4(3), pages 25-39, Summer.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Koomin Kim, 2023. "How gubernatorial budgetary power and interest groups affect vertical fiscal imbalances in the US states: Focusing on fiscal centralization and decentralization," Public Budgeting & Finance, Wiley Blackwell, vol. 43(2), pages 53-81, July.
    2. Naresh Kumar & Ritu Rani, 2019. "Regional Disparities in Social Development: Evidence from States and Union Territories of India," South Asian Survey, , vol. 26(1), pages 1-27, March.
    3. Nupur Nirola & Sohini Sahu & Atrayee Choudhury, 2022. "Fiscal decentralization, regional disparity, and the role of corruption," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 68(3), pages 757-787, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Nupur Nirola & Sohini Sahu & Atrayee Choudhury, 2022. "Fiscal decentralization, regional disparity, and the role of corruption," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 68(3), pages 757-787, June.
    2. Jorge Martinez-Vazquez & Santiago Lago-Peñas & Agnese Sacchi, 2017. "The Impact Of Fiscal Decentralization: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 31(4), pages 1095-1129, September.
    3. Andrés Rodríguez-Pose & Roberto Ezcurra, 2010. "Does decentralization matter for regional disparities? A cross-country analysis," Journal of Economic Geography, Oxford University Press, vol. 10(5), pages 619-644, September.
    4. Christian Lessmann, 2012. "Regional Inequality and Decentralization: An Empirical Analysis," Environment and Planning A, , vol. 44(6), pages 1363-1388, June.
    5. Tristan Canare, 2022. "Decentralization and welfare: Evidence from a panel of countries," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 93(3), pages 767-796, September.
    6. Andreas P. Kyriacou & Leonel Muinelo-Gallo & Oriol Roca-Sagalés, 2015. "Regional inequalities, fiscal decentralization and government quality: empirical evidence from simultaneous equations," Working Papers. Collection A: Public economics, governance and decentralization 1501, Universidade de Vigo, GEN - Governance and Economics research Network.
    7. Heinz Handler, 2006. "Staatsausgaben und Wirtschaftswachstum in Europa. Der Beitrag der öffentlichen Ausgaben zur Lissabon-Strategie," WIFO Studies, WIFO, number 26583, April.
    8. Christian Lessmann, 2012. "Regional inequality and decentralization: an empirical analysis," Environment and Planning A, Pion Ltd, London, vol. 44(6), pages 1363-1388, June.
    9. Christian Lessmann, 2009. "Fiscal Decentralization and Regional Disparity: Evidence from Cross-Section and Panel Data," Environment and Planning A, , vol. 41(10), pages 2455-2473, October.
    10. Sidra Naeem & Rana Ejaz Ali Khan, 2021. "Fiscal Decentralization and Gender Equality in Developing Economies: Dynamics of Income Groups in Economies and Corruption," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 11(9), pages 745-761, September.
    11. Fidel Perez-Sebastian & Ohad Raveh, 2016. "The Natural Resource Curse and Fiscal Decentralization," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 98(1), pages 212-230.
    12. Tarkan Cavusoglu & Oguzhan Dincer, 2015. "Does decentralization reduce income inequality? Only in rich states," Southern Economic Journal, Southern Economic Association, vol. 82(1), pages 285-306, July.
    13. Tarkan Cavusoglu & Oguzhan Dincer, 2015. "Does decentralization reduce income inequality? Only in rich states," Southern Economic Journal, John Wiley & Sons, vol. 82(1), pages 285-306, July.
    14. Smith, Heidi Jane M. & Revell, Keith D., 2016. "Micro-Incentives and Municipal Behavior: Political Decentralization and Fiscal Federalism in Argentina and Mexico," World Development, Elsevier, vol. 77(C), pages 231-248.
    15. Evgeny Yakovlev & Ekaterina Zhuravskaya, 2006. "State Capture in a Federation," Working Papers w0093, Center for Economic and Financial Research (CEFIR).
    16. Reingewertz, Yaniv, 2014. "Fiscal Decentralization - a Survey of the Empirical Literature," MPRA Paper 59889, University Library of Munich, Germany.
    17. Justina AV Fischer & Antonio Rodriguez-Andr�s, 2008. "Political institutions and suicide: A regional analysis of Switzerland," TWI Research Paper Series 33, Thurgauer Wirtschaftsinstitut, Universität Konstanz.
    18. Canavire-Bacarreza, Gustavo & Martinez-Vazquez, Jorge & Yedgenov, Bauyrzhan, 2020. "Identifying and disentangling the impact of fiscal decentralization on economic growth," World Development, Elsevier, vol. 127(C).
    19. repec:wly:soecon:v:82:1:y:2015:p:285-306 is not listed on IDEAS
    20. Thushyanthan Baskaran & Lars P. Feld & Jan Schnellenbach, 2014. "Fiscal Federalism, Decentralization and Economic Growth: Survey and Meta-Analysis," CESifo Working Paper Series 4985, CESifo.
    21. Xuhong Su & Kelan Lu & Xiangming Hu & Yuqiong Xiang, 2019. "Reforms on county-level fiscal governance in China: impact on urban-rural income inequality," International Review of Public Administration, Taylor & Francis Journals, vol. 24(2), pages 81-100, April.

    More about this item

    Keywords

    Government intervention; regional disparity; local governments; Indian states; constitutional amendments;
    All these keywords.

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:soueco:v:15:y:2014:i:2:p:281-314. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: http://www.ips.lk/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.