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Public Expenditure, Governance and Human Development: A Case of Madhya Pradesh

Author

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  • Bhanumurthy, N.R.

    (National Institute of Public Finance and Policy)

  • Prasad, Manish

    (National Institute of Public Finance and Policy)

  • Jain, Richa

    (National Institute of Public Finance and POlicy)

Abstract

This paper examines the link between quality of governance, public expenditure and human development outcomes in the state of Madhya Pradesh. The role of governance is measured in five dimensions: Political, Legal Judicial, Administrative, Economic and Social. A total of 22 indicators have been used to measure the Governance Index (GI) of Madhya Pradesh at district level. The results in this paper suggest that, at district level, development expenditure alone is not sufficient in achieving human development outcomes. However, the effectiveness of public expenditures improves with better governance indicators. In addition, GI is found to be significant and positive in improving development outcomes. Among the governance dimensions, weak administrative index appears to be the main constraint in improving the human development outcomes in less developed districts. Disaggregated analysis suggests that the districts with lower human development achievements need to prioritize only in one or two dimensions of governance, in particular administrative governance. Prioritization of various or specific dimensions of governance should help in reducing the divergences in development outcomes across the districts. The findings of this paper are very important as they suggest that public expenditure efficiency depends on the quality of governance. Hence, there is a need to equally focus, both, on improving governance as well as on increasing development expenditures. In the context of achieving SDGs and with the lessons learnt from MDGs, the findings of the paper suggest that we should focus on policy both at the sub-national and sub-state level.

Suggested Citation

  • Bhanumurthy, N.R. & Prasad, Manish & Jain, Richa, 2016. "Public Expenditure, Governance and Human Development: A Case of Madhya Pradesh," Working Papers 16/171, National Institute of Public Finance and Policy.
    • Handle: RePEc:npf:wpaper:16/171
    Note: Working Paper 171, 2016
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    References listed on IDEAS

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    1. David Croix & Clara Delavallade, 2009. "Growth, public investment and corruption with failing institutions," Economics of Governance, Springer, vol. 10(3), pages 187-219, July.
    2. Stefano Paternostro & Anand Rajaram & Erwin R. Tiongson, 2007. "How Does the Composition of Public Spending Matter?," Oxford Development Studies, Taylor & Francis Journals, vol. 35(1), pages 47-82.
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    Cited by:

    1. Priya Ranjan & Prasant Kumar Panda, 2022. "Pattern of Development Spending and Its Impact on Human Development Index and Gross State Domestic Product in Low-income States in India," Journal of Development Policy and Practice, , vol. 7(1), pages 71-95, January.
    2. Kamalu, Kabiru & Wan Ibrahim, Wan Hakimah, 2022. "The Influence of Institutional Quality on Human Development: Evidence from Developing Countries," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 56(1), pages 93-105.
    3. Mohanty, Ranjan Kumar & Bhanumurthy, N.R., 2018. "Assessing Public Expenditure Efficiency at Indian States," Working Papers 18/225, National Institute of Public Finance and Policy.
    4. Bhattacharya, Rudrani, 2016. "How does Supply Chain Distortion affect Food Inflation in India?," Working Papers 16/173, National Institute of Public Finance and Policy.
    5. Md. Golam Kibria & M. M. K. Toufique, 2023. "Institutional governance and quality of life: evidence from developing countries," SN Business & Economics, Springer, vol. 3(3), pages 1-20, March.

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    More about this item

    Keywords

    Governance ; Public Expenditure ; Human Development ; SDGs;
    All these keywords.

    JEL classification:

    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • H76 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Other Expenditure Categories
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development

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