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Social Capital and Performance of Fiscal Institution in India during 1991-2012

Dinda, Soumyananda (2014): Social Capital and Performance of Fiscal Institution in India during 1991-2012.

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Abstract

This paper examines the relationship between social capital and performance of fiscal institutions using provincial sub-national state level data in India during 1991-2012. Institution in India is significant and controls fiscal performances as per social need for economic development. People participation in public affairs or simply vote turnover in general election in India is taken to measure the social trust on fiscal institution. Fiscal performance in India is based on social capital. As one percent vote turnover rate rises fiscal deficit reduces by 2.6 to 2.8 percent. Empirical findings suggest that social capital indirectly control the fiscal performance of the elected government. The results are robust to a number of control variables. The strong political trust is established through high turnover rate and vote share in the election for formation of government that create the platform for sound fiscal policy decisions.

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