Fiscal Decentralisation and Public Service Delivery Evidence from Selected States in India

Abstract

Decentralisation evolves as an adaptable practice across many countries and lacks precise definition at the practical realms. Empirical evidences have shown that link between fiscal decentralisation and public service delivery is inconclusive, and depends on the interface between the degree of decentralisation (regarding asymmetry in devolving functions and finance) and institutions. On the effectiveness of fiscal decentralisation on public service provisioning in India, the thesis specifically examines: 1) the relative role of different institutions in shaping up the intergovernmental fiscal transfer system, 2) the flypaper effect - whether local government expenditure is more responsive to an amount of increase in intergovernmental transfers than the equivalent increase in voters income, and 3) the effectiveness of fiscal transfers in public service delivery. newlineDecentralisation evolves as an adaptable practice across many countries and lacks precise definition at the practical realms. Empirical evidences have shown that link between fiscal decentralisation and public service delivery is inconclusive, and depends on the interface between the degree of decentralisation (regarding asymmetry in devolving functions and finance) and institutions. On the effectiveness of fiscal decentralisation on public service provisioning in India, the thesis specifically examines: 1) the relative role of different institutions in shaping up the intergovernmental fiscal transfer system, 2) the flypaper effect - whether local government expenditure is more responsive to an amount of increase in intergovernmental transfers than the equivalent increase in voters income, and 3) the effectiveness of fiscal transfers in public service delivery. newlineA detailed disaggregated dataset is formulated on intergovernmental transfers, categorised by the institutions and types, aggregated from the Finance Accounts data for each state through budget tagging approach for the period from 1987-88 to 2010-11. The empirical analysis of this data........