Revisiting fiscal performance of non-special category states of India: a global Malmquist index approach

Y.N. Raju, Vishal Kumar Dev and Asit Ranjan Mohanty

Vilakshan - XIMB Journal of Management, 2024, vol. 22, issue 2, 282-295

Abstract: PurposeThis paper aims to analyse the fiscal performance of non-special category states of India.Design/methodology/approachThis study applied a global Malmquist productivity index (GMPI) to measure the state fiscal performance, using eight fiscal indicators to measure the fiscal stance of 17 non-special category states of India over the period 2000–2020.FindingsThe findings reveal significant inter-state variations in all the fiscal indicators over the period. Goa, Haryana, Kerala, Chhattisgarh, Odisha and Jharkhand have been the best fiscal performers in recent years. The states Chhattisgarh, Jharkhand and Odisha present an interesting case; their fiscal performance index (productivity) score increased more than 1% during the sample period as compared to other states. This improvement is primarily associated with revenue efficiency, expenditure quality and size of capital outlay.Research limitations/implicationsThe conventional Malmquist productivity index uses a geometric mean form of two contemporaneous measures of productivity change and this index faces a potential linear programming infeasibility problem in measuring cross-period directional distance functions. Therefore, productivity growth measured using indexes should be interpreted with caution. Therefore, the results obtained based on the GMPI might be missing the sensitive check.Originality/valueThis study is a pioneering initiative in India, constructing a fiscal performance index to measure and rank the non-special category states of the country based on GMPI, thus addressing limitations in previous studies on index formation techniques and selecting fiscal indicators.

Keywords: Ranking; Fiscal deficit; Fiscal performance; Malmquist index; Total efficiency (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eme:xjmpps:xjm-03-2024-0047

DOI: 10.1108/XJM-03-2024-0047

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