Non-development Expenditure Research Articles

Global Perspectives on Fiscal Policy and Labor Income-Leisure Choices: Theoretical and Practical Insights

In macroeconomic literature, fiscal policy is considered a powerful tool to achieve sustainable development, full employment, and social well-being in developed and developing societies. For this, public authority uses expansionary and contractionary tax policies to achieve stable growth and employment environment for the stable labor market. This study theoretically and empirically investigates the problem of inference on income-leisure labor preference. Also, it considers the impact of tax and expenditure structure on labor choices regarding working hours under the assumption of neoclassical theory. We use quantile regression analysis to investigate the data set for worldwide, high, and low-income countries from 2000 to 2022, for the macro-level analysis based on the empirical investigation of 123 countries cross-section panel. The outcomes show that when the fiscal authorities impose a regressive form of taxes, it may hurt the labor wages and distribution of income-leisure preferences or the welfare of labor. Similarly, non-labor income hurts labor utility through a large volume of non-development expenditure. However, when the progressive form of taxes is imposed, it may improve the labor utility. At the same time, on the other side, when fiscal authority disburses the development expenditure, it may support the non-labor income through the provision of public goods and services. For practice, the empirical results of quantile regression show that government expenditure has a positive while tax hurts labor supply. Fiscal policy in low-income countries has provided an alternative outcome

Digital resource granting in new education policy and socioeconomic in small industry development in India

The economy of India cannot accomplish the objective of sustainable economic development until or unless it can put a generous sum into human resources. Education is a fundamental factor in development. It does not just improve the personal satisfaction of an individual, yet, addition, it improves the social advantage of the public. The motivation behind this examination is to discover how public expenditures on education can improve the economic and social state of the society in India. Regardless, the issue is whether further developed levels of education come about on the ground of education to craft skill artisans in small industries like giving digital training or digital education to Indian traditional artisans that may compete with the global handicraft sector. For the development of the handicraft sector, a separate global handicraft index has also been developed by the Indian scholar to give positive competition and advance new education to an artisan of global craft, and that more education spending can advance economic growth is yet sketchy. A few economic and social analysts and researchers have maintained the two-sided connectivity between these two factors, yet some are recommending that economic growth essentially animates the government to spend more on education, not the substitute way. The research question of this study is “do education and expenditures on education get economic and social advancement?” Considering this research issue, the current study utilizes Granger causality methods to conclude the causal connection between the government’s education spending and socioeconomic development in India for the period 1972–2021. Results uncovered that there is no short-run causality between government expenditure on education and socioeconomic growth, yet economic growth influences public spending on education. This provides guidelines to the new education policy (NEP) makers that they should prioritize their attention toward allocation of development and non-development expenditures of the government’s budget to enhance the quality of education and welfare of individuals in the society. Special focus should be given to compulsory primary education, which is already a part of sustainable development goals.

Assessing the household saving behavior of urban and rural households in Pakistan: Evidence from PSLM/HIES 2018-19

The purpose of this article is to examine household saving behavior in urban and rural areas of Pakistan. The study obtained microdata from the Household Integrated Economic Survey (HIES) 2018-19 and Pakistan Social Living Standards Measurements Survey (PSLM) 2018-19 conducted by the Pakistan Bureau of Statistics (PBS). A nationally representative sample of 5499 households is selected, 3155 from rural areas and 2344 from urban areas by using systematic sampling. The impact of socioeconomic and demographic characteristics on household saving behavior is investigated by applying a multiple linear regression model through Ordinary Least Squares (OLS) estimation method. A strong relationship between household saving behavior and socioeconomic and demographic characteristics is observed. Income has a positive impact on household savings, but age, dependency ratio, and family size have a negative effect. Furthermore, it is found that as the household income rises, their savings rise as well. Although, people residing in rural areas tend to save more amount contrary to urban households. However, saving rates of household with large families exhibited a decline in saving. Government should introduce new saving schemes in banks and reduce non-development expenditures for productive plans. It will provide motivation for domestic saving and an upsurge in employment opportunities.

Foreign Aid and the Public Sector: A Model of Fiscal Behaviour in Pakistan

The main aim of this paper is to demonstrate the impact of foreign capital inflows on government’s fiscal behaviour in Pakistan. Government’s fiscal response is measured in terms of social, non-development, and development expenditures as well as revenues. This paper specifies and estimates a fiscal behaviour model for the period 1976–95. The threestage least squares results suggest that foreign capital flows into the public sector have strong positive impact on social and non-development expenditures and, in contrast to what the government and donor agencies believe, have little effect on development spending. In other words, proceeds from foreign loans and aid are largely consumed rather than invested productively. The results also reveal the strong substitutable interdependence between social and non-development expenditures. Furthermore, the finding clearly demonstrates that foreign assistance causes a strong shift of public domestic resources from development projects to non-development activities. In addition to the above, the results show that a large fraction of government revenues is used to finance social and non-development expenditures. The results also demonstrate that foreign assistance enhances taxation efforts of the Government of Pakistan.

Resource allocation in Education and Socio-economic Education Development in the Small Industry in India

Economy of India can't accomplish the objective of sustainable economic development and education about small industries to the resource like human resources, until or unless it can put a generous sum in human resources. Education is a fundamental factor of development. It does not just improve the personal satisfaction of an individual yet in addition improves the social advantage of the public. The motivation behind this examination to discover how public expenditures on education can improve the economic and social state of the society in India. Regardless, the issue that whether further developed level of education coming about on the grounds that more education spending can advance economic growth is yet sketchy. A few economic and social analysts and researchers have maintained the two-sided connectivity between these two factors, yet some are recommending that economic growth essentially animates government to spend more on education, not the substitute way. The research question of this paper is "do education and expenditures on education get economic and social ith eduction of small industry advancement"? Considering this research issue, the current paper utilizes Granger Causality methods to conclude the causal connection between government's education spending and socio-economic development in India for the period 1972-2021. Results uncovered that there is no short run causality between government expenditure on education and socio-economic growth, yet economic growth influences public spending on education. This provides guidelines to the new education policy(NEP) makers that they should priorities their attention towards allocation of development and non-development expenditures of government’s budget to enhance the quality of education and welfare of individuals in the society. Special focus should be given on the compulsory primary education which is already a part of sustainable development goals.

On the environmental effects of development and non-development expenditure in India: Evidence from an asymmetric ARDL model

The main purpose of this study is to model and measure the impact of development and non-development expenditure on the carbon dioxide emissions (per capita metric tons) in India over 1980–2018. The Asymmetric ARDL approach (NARDL), an advanced econometric technique, was applied to examine the nexus between CO2 emissions, development and non-development expenditure, national income, energy consumption and population. The short-run and long-run results establish a statistically significant relationship between carbon emissions and the explanatory variables. The long-run asymmetrical results indicate that energy consumption and national income growth pollute the environment. However, we did not find any significant long-run impact of population on pollution levels in India. Furthermore, the results reveal that increase in development expenditure leads to environmental degradation and non-development expenditure mitigates pollution. No evidence of the applicability of EKC was found in India. The authors conclude that a reasonable method of tackling the threat of environmental degradation is to remove distortions in public expenditure policy. We recommend the government to phase out fiscal benefits to pollution-prone economic activities and thus spend the money saved on pollution abatement efforts.

AN EVALUATION OF FINANCIAL PERFORMANCE OF MUNICIPAL CORPORATIONS IN KARNATAKA WITH REFERENCE TO MYSURU AND MANGALURU CITY CORPORATIONS

The research study attempts to evaluate the financial performance of Mysuru and Mangaluru City Corporations in Karnataka. The study is based on secondary data, which will be collected through secondary sources of financial statements of Mysuru and Mangaluru city corporation. The data so collected will be tabulated appropriately to achieve the objectives set. Required statistical tools will also be used to test the hypotheses formulated in the study. The per capita income and per capita expenditure were increased in all selected Municipal corporations during the study period 2010-11 to 2019-20. There is no significant difference in per capita income between Mysuru CC and Mangaluru CC, which means per capita income is almost equal in selected Municipal Corporations. The per capita expenditure is also equivalent to Mysuru CC and Mangaluru CC. It also found that the expenditure of selected Municipal Corporation is high compared to their income, which means the selected Municipal Corporation depends on State Government grants and loans. There is a significant difference between the development and non -development expenditure on revenue account of both Mysuru and Mangaluru City Corporations. The Mysuru CC had the highest development expenditure in 2017-18 and became 262.64 crores and lowest by 50.04 crores of Mangaluru CC in 2012-13. The Mysuru CC has the highest non-development expenditure in 2019-20 and became 199.52 crores and lowest by 16.73 crores of Mangaluru CC in 2010-11.

Do government expenditures and institutions drive growth? Evidence from developed and developing economies

PurposeMost empirical studies on the government expenditure-economic growth nexus suggest a negative relationship between the size of the government expenditures and economic growth especially government consumption expenditures. Given these findings, the government should focus on development expenditures and reduce non-development expenditures for higher economic growth. However, the authors argue that this may not be the case, as government consumption expenditures along with better institutional quality promote growth via reduced corruption, reduction of political risks and good governance. The purpose of this study is to provide empirical evidences that both government consumption and development expenditure promote growth in the presence of better institutional quality.Design/methodology/approachThis paper re-examines the impact of government expenditures on growth whilst controlling institutional factors for a sample of 30 developed and 91 developing countries from 1984 to 2017. Government expenditure is segregated into consumption and development expenditures.FindingsThe results are consistent with existing findings where government consumption expenditures have a negative effect on growth and government development expenditures contribute positively towards growth. However, when the authors conditioned government consumption expenditures with institutional variables, results suggest that in the presence of good institutions, both government consumption and development expenditures promote growth.Practical implicationsThe findings in this paper suggest that in the presence of good institutions, government consumption expenditures will contribute positively towards growth. The results are relatively consistent for both developing and developed economies, which suggests the importance of institutional factors leading to a parallel movement towards long run growth path. In other words, long run economic growth is driven by a similar institutional environment.Originality/valueBoth developed and developing countries show similar reactions towards consumption and development expenditures. This indicates that despite the level of development, government expenditures do contribute positively towards growth especially in the presence of better-quality institutions.

Revisiting the Wagner’s law for Indian States using second generation panel cointegration

In this paper, we examine if the Wagner’s law, that indicates a long-run economic relationship between government expenditure and income, holds across 15 non-special category states of India post the 1991 liberalization era. In particular, we study the non-stationarity and cointegration properties between state-level government expenditure and state-level income. Given the presence of cross-sectional dependence in our data, we adopt the second-generation panel unit root and cointegration tests. Using panel estimation methods, our results indicate that the Wagner’s law holds at an all-India level with respect to all categories of government expenditure i.e. aggregate government expenditure, development expenditure and non-development expenditure. States with above-average income mostly exhibit long-run elasticity less than one across all types of government expenditure while states with below-average income level exhibit long-run elasticity greater than one across all categories of government expenditure.

General Government Expenditure and Economic Growth in India: 1980-81 to 2015-16

The objective of this paper is to investigate the impact of General government expenditure on GDP growth in India for the period 1980-81 to 2015-16 by using Simple Regression Analysis. FDI Growth Rate and two dummy variables i.e., one for financial crisis 2008 and another one for reform period 1991 have been used. All the explanatory variables are positively and significantly affecting the GDP growth rate except FDI Growth rate. The crisis period dummy shows that in post 2008 there was a negative and significant impact of general government expenditure on GDP growth rate. The reform period dummy shows that in post 1991 there was a positive and significant impact of general government expenditure on GDP growth rate. We have tested the multicollinearity test, which indicates presence of no serial correlation among the explanatory variables. We have also tested the autocorrelation, using the Breutch Pagan test, the results of which indicate the presence of no autocorrelation. The study further reveals that Non-development expenditures continue to be a large proportion of the general government expenditure. Expenditure management has to lay more emphasis on the design of the programme and the exploration of the alternatives. The authors suggest that there is a need to raise the development expenditure on infrastructure to achieve more economic growth. The study highlights that in addition to fiscal correction and consolidation, fiscal reform at the state level should focus on fixing ceilings on guarantees, taking into account the default and development probability, nature of guarantees issued, pricing of services rendered by the project for which guarantees are extended.

Measurement of social development: evidence from India

PurposeThe purpose of this paper is to examine the progress of social development in terms of social development index (SDI) of India in the pre- and post-reforms period.Design/methodology/approachThis study used the methodology of Ray (1989, 2008) for the construction of composite index for social development, i.e. SDI. The study also used the ordinary least squares method of regression analysis for checking the impact of development expenditure, non-development expenditure and Per Capita Net National Product (PCNNP) on the SDI value.FindingsThe results show an increasing trend in social development. The findings of this study also suggest that there is a sharp increase in the index over the period between 2002/2003 and 2010/2011. But in the remaining period, sluggish improvement in social development has been observed. Though there has been growth in the social sector, but it is not much heartening and perhaps more efforts need to be done in the social sector in India. The results also exhibit that development expenditure, non-development expenditure and PCNNP are significantly affecting the SDI value.Practical implicationsThe study suggests that the government should focus more on social sector programs and there is an urgent need to increase development and non-development expenditures to improve the overall social condition of the country.Originality/valueThe work is different in terms of number of development variables from the already existing literature in India. The author constructed the SDI by using the weighted sum of 12 transformed social variables which has not been studied previously.

An Appraisal of PakistannS Public Finance Management

Public Financial Management (PFM) is fundamentally the management of financial resources of a country in order to optimally address national and local priorities. Efficient PFM enhances and sustains economic and social growth in the country and should cover aggregate financial management, operational management, asset acquisition & disposal and treasury management. The major components of PFM are Public Revenues, Public Expenditures and Public Debt Management. The legal and institutional frameworks of PFM along with the procedure for assignment financial powers and distribution revenues have been provided in the Constitution of Islamic Republic of Pakistan, 1973. In Pakistan, all the three major components of PFM suffer from a myriad of problems. These problems are worsened as all three are interlinked and therefore need immediate attention. Revenue Management in Pakistan is plagued with persistently low Tax to GDP ratio, narrow tax base, weak enforcement of laws, skewed tax mix, ad-hoc policies and short-term fixes. Due to inadequacy in tax collection at provincial level, the entire burden of revenue collection has fallen on the Federal Government/FBR alone. Similarly, our poor Expenditure Management and resultantly high fiscal deficit is another point of concern. Since our current expenditure constitutes a major portion of the total expenditure, the development expenditure remains neglected. Moreover, due to misplaced priorities, whatever little is being spent on development projects, has hardly any benefit for the public in general and results in creation of non-productive assets. Adding to the woes is the continuous burden of loss making SOEs, lack of contingency planning and failure of expenditure management reforms.On the Debt Management side, there is an exponential increase in the Public Debt as a result of high Domestic Debt due to unchecked domestic borrowing from SBP as well as commercial banks. This has in turn resulted into increasing the debt servicing expenditure and crowding out the private sector. Debt mismanagement continues in the form of floating government bonds in the international market at high interest rates.Considering the interlinkages of the three components of PFM, their ailments must be addressed as a whole with solutions having long term focus rather than the usual ad-hoc firefighting approach. Long term planning for revenue collection should include broadening the tax base, both at the federal and provincial levels, efficient enforcement measures, monitoring of tax officials’ performance on the basis of KPIs. Long term planning in Expenditure Control is absolutely essential. This refers to investments in developmental projects rather than spending scarce resources on current expenditures. There is a need to freeze the non-development expenditures for at least three years and focus on projects aimed at social and economic development. To break the current debt loop, it is important to begin by giving true autonomy to the SBP and re-evaluate its regulations by including a fixed ratio for fund allocation to the government and to the commercial sector. Another area that needs consideration and attention is the lack of shared understanding between provincial and federal authorities. A Fiscal Coordination Committee should be constituted at Federal Government level with specific timelines and goals, to address and resolve federal and provincial jurisdiction issues.

The Fiscal Effects of Foreign Aid in Lesotho

Lesotho has historically depended on foreign aid. This paper seeks to understand the fiscal effects of such aid inflows on Lesotho’s economy over the period 1982-2010. The cointegration test results indicate a strong negative long-run association between recurrent expenditure and foreign aid, and a positive but marginally significant relationship between aid and capital expenditure. These findings provide lack of evidence for the presence of aid fungibility since foreign aid is not diverted to non-development expenditure. The Lesotho Highlands Water Project also seems to have been effective in terms of changing government budgetary allocations and has had a positive impact on development spending. This supports the notion that provision of loans instead of grants results in an effective use of government funds. DOI: 10.5901/mjss.2016.v7n1p116

Impact of Non-Development Expenditure on Economic Development of Pakistan

The purpose of this study was to identify the relationship between the non-development expenditure and 6 independent variables of economic development for that reason data was collected from the ministry of finance government of Pakistan and State Bank of Pakistan for above said variables for the period of 2000-01 to 2009-10 and linear regression was applied to identify the relationship and concluded that overall model is fit means independent variables in the equation is rightly predicting the dependent variable (non-development expenditure), but the strength of relationship is somehow high and positive of independent variables Health & Nutrition expenditure with the non-development expenditure, and unemployment rate and exports according to the data and results are negatively related with the non-development expenditure, which means exports must be increased to reduce the non-development expenditure.

Role of Taxation in Formulation of Fiscal Plan (Case study of Pakistan)

Research on the role of taxation in formulation of fiscal plan was started from the idea of data collection from the ministry of finance government of Pakistan for the purpose of checking the inter correlation and degree of association between tax collection and dependent variables of fiscal plan: development expenditure, non-development expenditure, by applying Pearson 1-tailed test and linear regression for checking the above effects, moreover researchers found that tax collection is highly correlated with development as well as non-development expenditure, and tax collection is positively associated with the development and non-development expenditures.

The impact of government spending on poverty reduction: Evidence from Pakistan 1972 to 2008

This study aims at assessing the impact of government spending in various sectors of the economy on poverty reduction. Time series annual data for the period 1972 to 2008 has been used for analyzing the long-run impact of government spending in education, health, economic and community services, budget deficit and law and order on poverty reduction by using recent econometric development. The results show that government spending on education and law and order significantly contribute to poverty reduction while government spending on budget deficit and economic and community services appeared to be responsible for poverty in Pakistan. The study reveals that government spending in health sector does not have significant impact on poverty reduction. The study recommends that Government of Pakistan should allocate more resources towards education and health sector for the development of human capital. There is a need to reform government institutions like police, judiciary, civil services that may help in reducing poverty. Furthermore government should cut down its wasteful non-development expenditure financed through domestic and foreign borrowing and allocate more resources for developing education, health and infrastructure sectors of the economy. Key words: Government spending, poverty, education, budget deficit, cointegration.

Foreign Aid and Government’s Fiscal Behaviour in Nepal: an Empirical Analysis

Using the cointegration technique, this paper examines the revenue and expenditure behaviour of the Nepalese government in the presence of foreign aid for the period 1975–2002. The results show that aid positively affects both development and non-development expenditure in the long run. However, the long-run relationship between aid and non-development expenditure is found to be stronger than that between aid and development expenditure. Since aid is generally given for development expenditure, these results indicate the possibility of diversion of aid to non-development expenditure. Thus, the long-run relationship between aid and non-development expenditure may indicate aid fungibility. On the other hand, no evidence is found in favour of the hypothesis that aid availability makes the government lazy in terms of domestic revenue mobilisation.

Foreign aid and fiscal behavior in a bounded rationality model: Different policy regimes

We examine how the source of foreign aid affects the composition of the recipient government's spending. Does the source of aid – bilateral or multilateral – influence recipient policy-makers' choice between development and nondevelopment expenditure? We depart from previous literature by introducing strong asymmetries in policy-makers' preferences. With the financial constraints set by foreign aid and domestic revenues, this formalization allows us to model and estimate the fiscal behavior of government policy-makers in the presence of foreign aid.

Government of Pakistan Budget, 1961-62 (Budget Estimates for 1961-62) - Notes and Documents

On the basis of existing taxation, Revenue Receipts for 1961-62 are placed at Rs. 215.53 crores. With Revenue Expenditure at Rs. 191.90 crores, the surplus amounts to Rs. 23.63 crores. The Revenue Receipts for 1961-62 show an increase of Rs. 18.79 crores over the Revised Revenue Estimates for 1960-61. With respect to Revenue Expenditure there was also an increase of Rs. 17.69 crores. The surplus on Revenue Budget for 1961-62 is expected to be higher by Rs. 1.10 crores than for 1960-61. The estimates of Capital Expenditure for 1961-62 total to Rs. 229.94 crores which reflects a rise of Rs. 26.08 crores over 1960-61 (Revised Estimates). In the Revenue Budget, the anticipated increase from Rs. 196.74 crores in 1960-61 to Rs. 215.53 crores in 1961-62 was expected to emerge chiefly from Customs, Central Excise Duties, and Interest Receipts. Collections under Customs Duties are expected to increase by Rs. 6.95 crores from Rs. 53.45 crores to Rs. 60.40 crores, under Central Excise Duties, by Rs. 1.36 crores from Rs. 32.33 crores to Rs. 34.07 crores and under Interest Receipts, by Rs. 4.05 crcres from Rs. 8.89 crores to Rs. 12.94 crores. On the Expenditure side, the increase from Rs. 174.21 crores to Rs. 191.90 crores is largely accounted for by Non-Development Expenditure on Debt Service and Frontier Regions. A small increase of Rs. 1.76 crores is also estimated in the field of Agriculture under Development Expenditure.