What do Fiscal Indicators of Fifteen Major States of India Reveal? 2005–2006 to 2013–2014

Abstract

The article examines the revenue and expenditure trends of 15 states of India during the period 2005–2006 to 2013–2014, by grouping them into high, middle and low income based on per capita Gross State Domestic Product (GSDP). The analysis reveals that the middle-income states have performed better than the high- and low-income states in own tax effort, whereas low-income states are ahead of all states average in proportion of development expenditure to GSDP. The quality of fiscal deficit has improved, as a major part of it is capital outlay for 12 out of 15 states. Central grants and taxes have shown progressive trends with the degree of progressivity more in the latter. In devolution of resources to local self governments (LSGs), only 5 states are ahead of all states average. The association between development expenditure, own tax revenue effort, devolution of Central taxes and Central grants is positive and statistically significant.