Artha Vijnana: Journal of The Gokhale Institute of Politics and Economics

Open Access Open Access  Restricted Access Subscription Access
Open Access Open Access Open Access  Restricted Access Restricted Access Subscription Access

The Rhetoric of Fiscal Performance: A Study of Odisha, India


Affiliations
1 Barpali College, Barpali 768029, Odisha, India
2 Institute of Development Studies, Jaipur 3020204, Rajasthan, India
     

   Subscribe/Renew Journal


This paper re-examines the fiscal performance of Odisha using receipt and expenditure side indicators. Low dormant own tax capacity, inappropriate expenditure management and meager political competition within the state are important reasons for persistent weak fiscal performance. The incomprehensiveness and operational issues of tax, prioritization for larger size of federal transfers and moderate political competition within the state pushed towards low tax capacity. Lack of strategic prioritization and operational inefficiency of public expenditure have led to inappropriate expenditure management. The state has to (i) administer its tax efficiently; (ii) manage public expenditure economically, efficiently and effectively through increasing the elasticity of developmental expenditures of GSDP and GSDP of own tax; and (iii) strategically prioritize the expenditure through decreasing the elasticity of own tax of non-developmental expenditure. The Centre may introduce an independent, impartial and semi-judicial body to equitably distribute central transfer across the state which, in turn, help the fiscal improvement of states.
Subscription Login to verify subscription
User
Notifications
Font Size

  • Afzal, M. (2014), Do Barriers to Candidacy Reduce Political Competition? Evidence from a Bachelor’s Degree Requirement for Legislators in Pakistan, Public Choice, 161(1-2): 51-72.

  • Bagchi, Amaresh (1998), Tax Assignment in the Indian Federation: A Critique, India’s Economic Reforms and Development, in Isher Judge Ahluwalia and L.M.D. Little (Eds.), India’s Economic Reforms and Development, Oxford University Press.

  • ---------- (2005), State VATs in Operation: Promises and Problems, Money and Finance, January – June, 2(20-21): 29-44.

  • Bardhan, Pranab and Tsung-Tao Yang (2004), Political Competition in Economic Perspective, Bureau for Research in Economic Analysis of Development, Working Paper No. 078, July.

  • Besley, T., T. Persson, and D.M. Sturm (2010), Political Competition, Policy and Growth: Theory and Evidence from the US, The Review of Economic Studies, 77(4): 1329-1352.

  • Bishnoi, N.K. (2005), Fiscal Management in Haryana: A Review, National Institute of Public Finance and Policy, Working Paper, 34:1-44.

  • Campo, Salvatore-Schiavo and Daniel Tommasi (1999), Managing Government Expenditure, Published by Asian Development Bank, ISBN-: 9715611974

  • Chaudhry, Ahmed and Ummad Mazhar (2018), Political Competition and Economic Performance: Empirical Evidence from Pakistan, Economics Discussion Papers, No. 27, Kiel Institute for the World Economy (IfW), Kiel, available at: http://hdl.handle.net/10419/176569.

  • Chelliah, Raja J. (2005), Malady of Continuing Fiscal Imbalance, Economic and Political Weekly, 40(31): 3399-3404.

  • Debnath, A. and N. Battacharjee (2019), Central Transfers and Tax Generation Efforts of Indian States, Economic and Political Weekly, 54(48): 29-35, December 7.

  • Garg, Shandhya, Ashima Goyal and Rupayan Pal (2014), Why Tax Effort Falls Short of Capacity in Indian States: A Stochastic Frontier Approach, IGIDR, Mumbai, Working Paper, No. 32.

  • Government of Odisha (2011), Audit Report of Comptroller and Auditor General of India.

  • ---------- (2012), Odisha Economic Survey 2011-12, Planning and Coordination Department, Directorate of Economics and Statistics, Bhubaneswar.

  • ---------- (2019), Odisha Economic Survey 2018-19, Planning and Convergence Department, Directorate of Economics and Statistics, Bhubaneswar.

  • Jena, P.R. (2011), Public Expenditures Management at Sub National Level: A Perspective from the State of Orissa, Orissa Economic Journal, 43 (1and2): 237-262.

  • Mahamallik, M., P. Sahu and S. Mahapatra (2014), The Paradox of Fiscal Imbalances in India, Working Paper No. 969, Alma Mater Stubiorum-universita di Bologna, department of Economics, Italy available at http://amsacta.unibo.it/4088/1/WP969.pdf, obtain 12/12/2019, 12.34 am.

  • Mahamallik, Motilal and Pareswar Sahu (2015), Paradox of Fiscal Imbalances: Recommendations of Fourteenth Finance Commission, Artha Vijnana, 57(4): 301-320.

  • Mohanty, Ranjan Kumar and N. R. Bhanumurthy (2018), Assessing Public Expenditures Efficiency at Indian States, National Institute of Public Finance and Policy, Working Paper 225, pp. 1-36.

  • Mukhopadhyay, Hiranya and Kuntal Kumar Das (2003), Horizontal Imbalances in India: Issues and Determinants, Economic and Political Weekly, 38(14): 1416-1420.

  • Nambiar, K.V. and M. Govinda Rao (1972), Tax Performance of States, Economic and Political Weekly, 7(21): 1036-1038.

  • Oommen, M.A. (1987), Relative Tax Effort of States, Economic and Political Weekly, 22(11): 466-470.

  • Prasanna, Alok Kumar (2016), Goods and Services Tax: An Exercise in ‘Controlled Federalism’? Economic and Political Weekly, 41(34): 10-11.

  • Psarianos, I.N. (2002), Fiscal Policy in an Endogenous Growth Model with Horizontally Differentiated Intermediate Goods, Spoudai, 52(4): 18-41.

  • Purohit, M.C. (2006), Tax Efforts and Taxable Capacity of Central and State Governments, Economic and Political Weekly, 41(8): 747-751+753-755.

  • Rajaraman, Indra and Debdatta Majumdar (2005), Equity and Consistency Properties of -Twelfth Finance Commission Recommendations, Economic and Political Weekly, 40(31): 3413-3420.

  • Rao, H. (1993), Taxable Capacity Tax-Efforts and Forecasts of Tax-Yield of Indian States, ISEC Available at http://203.200.22.249:8080/jspui/bitstream/123456789/45/1/Taxable_capacity_ for_tax_effort s_and_forecast.pdf.

  • Rao, M. Govinda (2004), Linking Central Transfers to Fiscal Performance of States, Economic and Political Weekly, 39(18): 1820-1825,1 May.

  • Rao, M.G. (2015), The Tyranny of the Status Quo: Challenge of Reforming India’s Tax System, India Policy Forum, National Council of Applied Economic Research, July 14-15.

  • Rao, M.G. and J.V.M. Sarma (1989), Measuring Tax Potential: Some Clarifications, Economic and Political Weekly, 37(31): 3261-3271.

  • Rao, M.G. and R.J. Chelliah (1996), Fiscal Federalism in India, Research in Economics: Second Survey, Indian Council of Social Science Research, New Delhi.

  • Rao, M.G. and T.K. Sen (1996), Fiscal Federalism in Theory and Practice, National Institute of Public Finance and Policy, New Delhi.

  • Ravishankar, V.J., Farah Zahir and Neha Kaul (2008), Indian States Fiscal Correction: An Unfinished Agenda, Economic and Political Weekly, 43(38): 57-62.

  • Reddy, K.N. (1975), Inter-States Tax Effort, Economic and Political Weekly, 10(50): 1916-1919 and 1921-1924.

  • Schick, A. (1999), A Contemporary Approach to Public Expenditure Management, World Bank Institute.

  • Sebastian, Jose (2019), Kerala’s Persistent Fiscal Stress: A Failure in Public Resource Mobilisation, Economic and Political Weekly, 54(22): 32-39.

  • Sen, Tapas K. and Santosh K. Dash (2013), Fiscal Imbalances and Indebtedness across Indian States: Recent Trends, National Institute of Public Finance and Policy, Working Paper, No.119, February.

  • Sunderam J.K. (2013), Enhancing Tax Revenue: A global priority, Economic and Political Weekly, 47(13): 18-20.

  • World Bank (2005), State Fiscal reforms in India: Progress and Prospects, Macmillan Press.

  • Yogo, Urbain T. and Martine M. Ngo Njib (2018), Political Competition and Tax Revenues in Developing Countries, Journal of International Development, 30 (2): 302–322.


Abstract Views: 509

PDF Views: 0




  • The Rhetoric of Fiscal Performance: A Study of Odisha, India

Abstract Views: 509  |  PDF Views: 0

Authors

Pareswar Sahu
Barpali College, Barpali 768029, Odisha, India
Motilal Mahamallik
Institute of Development Studies, Jaipur 3020204, Rajasthan, India

Abstract


This paper re-examines the fiscal performance of Odisha using receipt and expenditure side indicators. Low dormant own tax capacity, inappropriate expenditure management and meager political competition within the state are important reasons for persistent weak fiscal performance. The incomprehensiveness and operational issues of tax, prioritization for larger size of federal transfers and moderate political competition within the state pushed towards low tax capacity. Lack of strategic prioritization and operational inefficiency of public expenditure have led to inappropriate expenditure management. The state has to (i) administer its tax efficiently; (ii) manage public expenditure economically, efficiently and effectively through increasing the elasticity of developmental expenditures of GSDP and GSDP of own tax; and (iii) strategically prioritize the expenditure through decreasing the elasticity of own tax of non-developmental expenditure. The Centre may introduce an independent, impartial and semi-judicial body to equitably distribute central transfer across the state which, in turn, help the fiscal improvement of states.

References





DOI: https://doi.org/10.21648/arthavij%2F2020%2Fv62%2Fi4%2F204643