This paper examined the impact of restricted and unrestricted fiscal grants on tax efforts of Rural Local Governments in India using ARIS/REDS panel data. We estimated the system as a whole via three stage least squares, where the first stage equations are the ones predicting the grants in order to deal with the simultaneities of grants received and taxation. The results have shown that a wage impacts on taxation exists, but is very small and, the productivity impact of grants on taxes is either zero or negligible. This means that incentives effects associated with the specifics of the intergovernmental fiscal system in the states is the main determinant of village taxation. We find that a bolder approach to shift about a third of the tied grants to block grants could lead own taxation to rise almost four fold. In the papers which analyze the services of education, health care and water supply we find the positive impacts of the village expenditures on these three services on choices, reduced private expenditures and outcomes.
Given that the phenomenon of capture of public programs by sections the population is rampant in developing countries, households can indulge in a strategy to improve their participating in public programs by bribing the suppliers of such programs. This is an important issue affecting both the supply of local public goods and the incidence of corruption. To the best of our knowledge there is no analysis of the impact of bribery on participating in a local public goods program, anywhere. Using a unique data set for rural India this paper addresses the question of whether households bribe elected officials responsible for assuring such supply to improve their access to local public goods. We find considerable evidence of such bribing. We also model the welfare effects of such bribing on groups of households as well as the impact of bribery on aggregate welfare. Several policy conclusions are advanced.
Identity based voting is a second best solution adopted by households to minimize the negative effects of one’s own identity and (or) identity based coalitions. If a significant source of household welfare is one’s identity or, membership in ethnically defined groups, then politics that results will be parochial in nature. In parochial politics voting along ethnic lines becomes a significant tool for gaining welfare or to discipline the elected representatives. Using newly available data from rural India, we establish that identity based voting will lead to enhanced participation in welfare programs and increased consumption growth. The paper is able to able to show that identity based voting results from the externalities derived from membership in social and information networks, and such voting by enhancing participation in welfare programs leads to significant increases in household consumption growth.
This study attempts to estimate and analyse the level of health-care expenditure incurred by the state governments and households in the rural sector of major states in India. It studies the interlinkage between public spending and household spending on health care. The utilisation of public and private facilities has also been analysed to provide a comprehensive view of the health sector in the context of the ongoing fiscal adjustment programmes. The household expenditure on health accounts for a major share of about 70-80 per cent of the total health expenditure in India. As a percentage of income, households spend about 5.40 per cent while the government spends only about 1.09 per cent in rural India, according to 1993-94 data. The structure of spending reveals that state governments spend largely on personnel in terms of salaries and wages, and households spend primarily on medicines, clinical charges, etc. This suggests that health spending by governments and households are complementary and not substitutes. The results of this study indicate a negative association between the overall economic development and prevalence rates of morbidity across the states. The analysis of household expenditure on the treatment of both short-duration and long-duration illnesses by various income levels clearly indicates that as income rises, the expenditure on health care also increases. A substantial proportion of poorer households in rural India depend on public health facilities for the treatment of short-duration and major morbidity. However, patients depend on private health facilities at higher levels of income. Similarly, dependency on indigenous practitioners is also found to decline at higher levels of income. Thus, any move to levy user charges or attempts to recover cost from public health facilities would impose a heavy financial burden on the poorer households and may discourage them from seeking any medical care.
This paper studies the idea (hypothesis) that increasing government spending on education should improve the quality of the education and access and thus bridge the gap between the private schools and public schools’ performance leading to indifferent choice between the school types and similar outcome. Nationally representative village, schools, and household level data from rural India allow us to study the impact of the spending on the school choice and measure performance gap (if there is any) between the types of schools and their impact on the welfare of the society as a whole. We find that even after the big government spending on education to improve the quality and access, the gap between the public private school’s performance still exits and that lead to the difference in the welfare (outcome) as a whole.
