Budgetary processes: a political economy perspective
AbstractThe response to macro shocks, given the electoral structure, built in perverse incentives that influenced India's development process. The chapter selectively surveys political economic theory, Indian and other country experience to bring out the systemic incentives that affect political behaviour, government budgets, and expenditure. Conceptual categories developed are found useful in interpreting Indian experience. Overtime, conflicts between groups were handled in a way that lowered incentives for expansion of the cake, and led to a short-term focus. Price controls bred inefficiencies, especially after the oil shocks. But there are leverage points for change. Well-coordinated macro policy, including infrastructure spending, with some restraints on political-bureaucratic choices, could create incentives for rapid growth. The latter eases political adjustments. It makes longer-term sustainable re-distribution feasible, and raises returns to choices that improve human capital.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 27786.
Date of creation: 2003
Date of revision:
perverse political incentives; macro shocks; price controls; political bureaucratic choices;
Find related papers by JEL classification:
- D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
- D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
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