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Budgetary processes: a political economy perspective

Author

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  • Goyal, Ashima

Abstract

The 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.

Suggested Citation

  • Goyal, Ashima, 2003. "Budgetary processes: a political economy perspective," MPRA Paper 27786, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:27786
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    File URL: https://mpra.ub.uni-muenchen.de/27786/1/MPRA_paper_27786.pdf
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    References listed on IDEAS

    as
    1. Goyal, Ashima, 2002. "Coordinating monetary and fiscal policies: a role for rules?," MPRA Paper 29200, University Library of Munich, Germany.
    2. Basu, Kaushik, 2003. "Prelude to Political Economy: A Study of the Social and Political Foundations of Economics," OUP Catalogue, Oxford University Press, number 9780199261857.
    3. repec:cup:apsrev:v:82:y:1988:i:02:p:405-422_08 is not listed on IDEAS
    4. Austen-Smith, David & Banks, Jeffrey, 1988. "Elections, Coalitions, and Legislative Outcomes," American Political Science Review, Cambridge University Press, vol. 82(02), pages 405-422, June.
    5. Goyal, Ashima, 1999. "The Political Economy of the Revenue Deficit," MPRA Paper 29980, University Library of Munich, Germany.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Ashima Goyal, 2005. "Making the politician and the bureaucrat deliver: Employment guarantee in India," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2005-008, Indira Gandhi Institute of Development Research, Mumbai, India.
    2. Ashima Goyal, 2007. "Governance in India's public transport systems: Comparing Indian railways and airlines," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2007-019, Indira Gandhi Institute of Development Research, Mumbai, India.
    3. Gulam Hassan, Mohamed Aslam & Tan, Yee Shin, 2012. "Political Economy of The Budgetary Process in Malaysia," MPRA Paper 37873, University Library of Munich, Germany.
    4. Ashima Goyal, 2009. "Governance in Public Transport Systems: Comparing Indian Railways and Airways," Working Papers id:1857, eSocialSciences.

    More about this item

    Keywords

    perverse political incentives; macro shocks; price controls; political bureaucratic choices;

    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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