Public Expenditure, Governance and Human Development: A Case of Madhya Pradesh

N R Bhanumurthy, Manish Prasad () and Richa Jain ()
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Manish Prasad: National Institute of Public Finance and Policy
Richa Jain: National Institute of Public Finance and POlicy

Working Papers from National Institute of Public Finance and Policy

Abstract: This paper examines the link between quality of governance, public expenditure and human development outcomes in the state of Madhya Pradesh. The role of governance is measured in five dimensions: Political, Legal Judicial, Administrative, Economic and Social. A total of 22 indicators have been used to measure the Governance Index (GI) of Madhya Pradesh at district level. The results in this paper suggest that, at district level, development expenditure alone is not sufficient in achieving human development outcomes. However, the effectiveness of public expenditures improves with better governance indicators. In addition, GI is found to be significant and positive in improving development outcomes. Among the governance dimensions, weak administrative index appears to be the main constraint in improving the human development outcomes in less developed districts. Disaggregated analysis suggests that the districts with lower human development achievements need to prioritize only in one or two dimensions of governance, in particular administrative governance. Prioritization of various or specific dimensions of governance should help in reducing the divergences in development outcomes across the districts. The findings of this paper are very important as they suggest that public expenditure efficiency depends on the quality of governance. Hence, there is a need to equally focus, both, on improving governance as well as on increasing development expenditures. In the context of achieving SDGs and with the lessons learnt from MDGs, the findings of the paper suggest that we should focus on policy both at the sub-national and sub-state level.

Keywords: Governance; Public Expenditure; Human Development; SDGs (search for similar items in EconPapers)
JEL-codes: H5 H76 O15 Q01 (search for similar items in EconPapers)
Pages: 20
Date: 2016-07
New Economics Papers: this item is included in nep-dev
Note: Working Paper 171, 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Working Paper: Public Expenditure, Governance and Human Development: A Case of Madhya Pradesh (2016)
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