Fiscal policy and economic development: regional analysis for India

Ashwani Bishnoi

International Journal of Business and Globalisation, 2023, vol. 34, issue 4, 481-497

Abstract: In the past decade, fiscal policy has been actively used by countries to safeguard their economies from adverse economic shocks. The present study brings a comparative analysis of fiscal policies practiced by Indian regions in the past two decades for managing their macroeconomic environment. Study also aims to empirically establish the role of fiscal policy towards economic development. For the purpose, GMM estimation is carried out for a panel data of 16 Indian states ranging from 2004-2005 to 2016-2017. With regard to fiscal measures, the states such as Andhra Pradesh, Himachal Pradesh, Kerala, and West Bengal are observed for higher deficit whereas Maharashtra, Orissa, Gujarat, Goa and Rajasthan could maintain the fiscal deficit well below the threshold level of 3% of the economic size. In terms of empirical estimation for role of fiscal policy on economic development, the study produces the contributory role of fiscal measures on development.

Keywords: fiscal reforms; fiscal deficit; Indian regions; FRBM Act; capital expenditure; revenue expenditure; tax revenue; economic development; panel data; GMM estimation. (search for similar items in EconPapers)
Date: 2023
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