Social capital and fiscal performance in India during 1991-2012
Abstract
Purpose
The purpose of this paper is to examine the relationship between social capital and fiscal performance using provincial sub-national state-level data in India during 1991-2012. Fiscal performance in India is based on social trust on fiscal institutions that emphasizes mainly social need for economic development.
Design/methodology/approach
People participation in public affairs or simply vote turnover in general election in India is taken to measure social trust on fiscal institution. Applying principal component analysis, the author constructs social capital index and examines the said relation also. Models are estimated using panel data techniques.
Findings
Strong social capital reduces fiscal deficits. As one percent vote turnover rate rises, fiscal deficit reduces by 2.6-2.8 percent during 1991-2012. The empirical findings suggest that social capital indirectly controls the fiscal performance of the elected government. The results are robust to a number of control variables.
Originality/value
The strong political trust is established through high turnover rate and vote share in the election for formation of government that creates the platform for sound fiscal policy decisions.
Keywords
Acknowledgements
The author is grateful to the anonymous reviewers of this journal for their valuable comments and suggestions. The author is also grateful to Prof Sugata Marjit for his valuable comments and suggestions on draft of this paper; and thanks to the participants at CTRPFP workshop, CSSS, Kolkata. The author is grateful to the CTRPFP, CSSS, Kolkata, for financial support of grant INR 3.0 lakh in 2013-2014 for this study. The author is also grateful to Dr Rittwik Chatterjee and Mr Sumit Dutta for their institutional support in the initial phase of this study.
Citation
Dinda, S. (2018), "Social capital and fiscal performance in India during 1991-2012", International Journal of Social Economics, Vol. 45 No. 1, pp. 187-204. https://doi.org/10.1108/IJSE-12-2016-0378
Publisher
:Emerald Publishing Limited
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