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Political Determinants of the Allocation of Public Expenditures: A Study of the Indian States

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  • Dash, Bharatee Bhusana

    ()
    (National Institute of Public Finance and Policy)

  • Raja, Angara V.

    ()
    (Dept. of Economics, University of Hyderabad)

Abstract

This study examines whether the allocation of public expenditures of the Indian states are significantly influenced by government specific political characteristics. Three types of government specific characteristics are considered: forms of governments, ideology of the government, and the electoral cycle. A number of hypotheses are designed to link these characteristics with expenditure allocation. The hypotheses are tested using a panel dataset of 14 Indian states spread over 27 fiscal years, from 1980-81 to 2006-07. The overall findings of the study suggest that the relationship between expenditure allocation and political determinants across the Indian states validate the proposed hypotheses even after controlling for the traditional and other unobservable determinants. These findings are robust to various forms of sensitivity analyses.

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Bibliographic Info

Paper provided by National Institute of Public Finance and Policy in its series Working Papers with number 12/101.

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Length: 26
Date of creation: Mar 2012
Date of revision:
Handle: RePEc:npf:wpaper:12/101

Note: Working Paper 101, 2012
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Web page: http://www.nipfp.org.in

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Keywords: Political determinants ; Expenditure ; Political parties ; Interest groups ; Indian states;

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  1. Khemani, Stuti, 2004. "Political cycles in a developing economy: effect of elections in the Indian States," Journal of Development Economics, Elsevier, vol. 73(1), pages 125-154, February.
  2. Alesina, Alberto & Wacziarg, Romain, 1998. "Openness, country size and government," Journal of Public Economics, Elsevier, vol. 69(3), pages 305-321, September.
  3. Wiji Arulampalam & Sugato Dasgupta & Amrita Dhillon & Bhaskar Dutta, 2008. "Electoral goals and center-state transfers: A Theoretical model and empirical evidence from India," Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers 08-14, Indian Statistical Institute, New Delhi, India.
  4. Roberto Ricciuti, 2004. "Political Fragmentation and Fiscal Outcomes," Public Choice, Springer, vol. 118(3_4), pages 365-388, 03.
  5. van Dalen, Hendrik P & Swank, Otto H, 1996. " Government Spending Cycles: Ideological or Opportunistic?," Public Choice, Springer, vol. 89(1-2), pages 183-200, October.
  6. Khemani, Stuti, 2007. "Does delegation of fiscal policy to an independent agency make a difference? Evidence from intergovernmental transfers in India," Journal of Development Economics, Elsevier, vol. 82(2), pages 464-484, March.
  7. Dollery, Brian E & Worthington, Andrew C, 1996. " The Empirical Analysis of Fiscal Illusion," Journal of Economic Surveys, Wiley Blackwell, vol. 10(3), pages 261-97, September.
  8. Padovano, Fabio & Venturi, Larissa, 2001. " Wars of Attrition in Italian Government Coalitions and Fiscal Performance: 1948-1994," Public Choice, Springer, vol. 109(1-2), pages 15-54, October.
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