Articles by Pinaki Chakraborty

There is a core concept of good governance, the combination of authority and responsibility to pursue the common good, that has remained stable over millennia. Building on this concept the paper develops several indices of the quality of governance and applies these indices to rank major states in India. The governance indices have been derived from the three main pillars of the government, i e, the legislature, the judiciary and the executive. Performance on each dimension of governance has been measured using indicators that are all based exclusively on factual data, not perceptions. The paper shows that there is a strong correlation between governance quality and the level of development in a state. When we correct for the effect of development on the quality of governance, it turns out that some of the poorer states significantly improve their rank, implying their governance performance is much better than would be expected at their level of development.

This special issue on the Report of the Thirteenth Finance Commission has eight experts evaluating its recommendations from different perspectives. While acknowledging the many plus points of the report, the writers also draw attention to its numerous drawbacks, ranging from a lack of proper attention and omissions to faulty logic. There is little doubt that some of the recommendations, if implemented in the right spirit, will benefit the management of public finances in the country. However, an awareness of the report's limitations could serve as an antidote to not slipping up again.

One of the most contentious issues in the discussions surrounding goods and services tax is the likely and feasible rates at which the new regime can be implemented. There have been a number of attempts at estimating the size of the tax base and the corresponding revenue neutral rate. The latest in the series is the report of the Task Force on gst of the Thirteenth Finance Commission. Most of these exercises throw up incredibly low revenue neutral rates resulting in apprehensions about the validity of these estimates and the consequent revenue risk. This paper seeks to estimate the base for the proposed gst on conservative assumptions to arrive at a more realistic estimate of the revenue neutral rates across states.

In the post-economic liberalisation era, financial sector and fiscal reforms by the central government have adversely affected sub-national finances. The centre's fiscal consolidation measures have contributed to the sharp decline in vertical transfers and the financial liberalisation-induced increase in interest rates has widened the resource gap of the states through an increase in the interest outgo on the stock of debt. This paper examines the effect of the fiscal imbalance on the sub-national fiscal space. Econometric estimates reveal that though the effect of the cost of debt on total expenditure is expansionary, it is negative with respect to the fiscal space. As the sub-national fiscal space has been shrinking, corrective measures are required to increase the states' ability to fulfil developmental fiscal needs.

The National Rural Employment Guarantee Scheme has so far posed no problem for the budget. Its allocation is only marginally higher than what was spent in the past by the government on various rural employment programmes. It is a demand-driven scheme and it has fallen far short of meeting demand in some states. The fund utilisation ratio also varies widely across states.