Assessing Public Expenditure Efficiency at Indian States
- Ranjan Kumar Mohanty and N.R. Bhanumurthy
- Mar 2018
- National Institute of Public Finance and Policy (NIPFP)
- India
In recent times, the issue of public expenditure efficiency has drawn the attention of both policymakers and researchers globally. Even in India, with increased demand for Outcome-based Budgeting, the assessment of public expenditure efficiency becomes much more crucial. By using the outlays-outcome framework, this paper attempts to measure the efficiency of government expenditures on Social Sector, especially health and education, among the Indian States. Further, the paper attempts to understand what drives the public expenditure efficiency among the States. The results suggest that there is a large variation in the efficiency of public spending and there is scope for resource saving among Indian States. States are spending their resources more efficiently on education than on health and overall social sector spending. The quality of governance and economic growth affects the efficiency of education, health, and social sector with governance having a larger effect compared to growth. Overall, the study suggests that focus on good governance could yield better outcomes from public spending.
