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Fiscal Decentralization and Development Outcomes in India: An Exploratory Analysis

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  • Kalirajan, Kaliappa
  • Otsuka, Keijiro

Abstract

This paper attempts to quantify the impact of fiscal decentralization in India on its social infrastructure and on rural development. Overall, the results in this paper indicate that Government of India within a federal framework has been fostering development equitably across its states, particularly through health and education expenditures aimed at improving human capital development. In this context, the importance of the two tier centre-states decentralization should be noted. However, the third tier of local governance, particularly the state-rural local bodies decentralization has been dismal and has not achieved significant results across states, which warrant the attention of the central and state governments.

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  • Kalirajan, Kaliappa & Otsuka, Keijiro, 2012. "Fiscal Decentralization and Development Outcomes in India: An Exploratory Analysis," World Development, Elsevier, vol. 40(8), pages 1511-1521.
    • Handle: RePEc:eee:wdevel:v:40:y:2012:i:8:p:1511-1521
    DOI: 10.1016/j.worlddev.2012.04.005
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    7. Yusniliyana Yusof & Kaliappa Kalirajan & Azhar Mohamad, 2022. "Fiscal decentralization and convergence in government spending in Malaysia," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(3), pages 2669-2681, July.
    8. Paul Smoke, 2016. "Looking Beyond Conventional Intergovernmental Fiscal Frameworks: Principles, Realities, and Neglected Issues," ADBI Working Papers 606, Asian Development Bank Institute.
    9. Mounir Azzam & Valerie Graw & Andreas Rienow, 2022. "Challenges and Innovations of Real Estate for Achieving Spatial Balance in Post-Disaster Countries," Land, MDPI, vol. 11(5), pages 1-23, May.
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    11. Ciccone, Dana Karen & Vian, Taryn & Maurer, Lydia & Bradley, Elizabeth H., 2014. "Linking governance mechanisms to health outcomes: A review of the literature in low- and middle-income countries," Social Science & Medicine, Elsevier, vol. 117(C), pages 86-95.
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    13. Betz, Joachim, 2019. "India's social policies: Recent changes for the better and their causes," GIGA Working Papers 314, GIGA German Institute of Global and Area Studies.
    14. Sandhya Garg, 2015. "Spatial convergence in public expenditure across Indian states: Implication of federal transfers," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2015-028, Indira Gandhi Institute of Development Research, Mumbai, India.
    15. Foa, Roberto Stefan, 2022. "Decentralization, historical state capacity and public goods provision in Post-Soviet Russia," World Development, Elsevier, vol. 152(C).
    16. Singh, Richa & Bhattacharjee, Sankalpa & Nandy, Amarendu, 2024. "Fiscal decentralization for the delivery of health and education in Indian states: An ongoing process is more desirable than a policy shift," Journal of Policy Modeling, Elsevier, vol. 46(2), pages 254-271.
    17. Kharel, Raj & Rodríguez-Pose, Andrés, 2025. "Devolution and economic resilience in Nepal," World Development, Elsevier, vol. 195(C).
    18. Estache, Antonio & Garsous, Grégoire & Seroa da Motta, Ronaldo, 2016. "Shared Mandates, Moral Hazard, and Political (Mis)alignment in a Decentralized Economy," World Development, Elsevier, vol. 83(C), pages 98-110.
    19. Dingqing Wang & Enqi Zhang & Hongwei Liao, 2022. "Does Fiscal Decentralization Affect Regional High-Quality Development by Changing Peoples’ Livelihood Expenditure Preferences: Provincial Evidence from China," Land, MDPI, vol. 11(9), pages 1-20, August.
    20. Yuan Li & Chuanjiang Yu & Yue Luo & Xinju He, 2024. "The higher‐ranking local officials and local economic growth: Evidence from China," Growth and Change, Wiley Blackwell, vol. 55(3), September.
    21. Cook, Nathan J. & Wright, Glenn D. & Andersson, Krister P., 2017. "Local Politics of Forest Governance: Why NGO Support Can Reduce Local Government Responsiveness," World Development, Elsevier, vol. 92(C), pages 203-214.
    22. Elacqua, Gregory & Munevar, Isabela & Sanchez, Fabio & Santos, Humberto, 2021. "The impact of decentralized decision-making on student outcomes and teacher quality: Evidence from Colombia," World Development, Elsevier, vol. 141(C).
    23. Aparna P Lolayekar & Pranab Mukhopadhyay, 2020. "“Understanding growth convergence in India (1981–2010): Looking beyond the usual suspects”," PLOS ONE, Public Library of Science, vol. 15(6), pages 1-17, June.
    24. Aadil Ahmad Ganaie & Sajad Ahmad Bhat & Bandi Kamaiah & N. A. Khan, 2018. "Fiscal Decentralization and Economic Growth: Evidence from Indian States," South Asian Journal of Macroeconomics and Public Finance, , vol. 7(1), pages 83-108, June.

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