Munich Personal RePEc Archive

Social Preference and Governance: A Case Study in India

Dinda, Soumyananda (2015): Social Preference and Governance: A Case Study in India.

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Abstract

This study investigates the relationship between social choice and fiscal performance in India since 1991. Social choice is simple measurement in public affair activities like participating in election. Vote turnover in a democracy is taken to measure trust on institution. Social trust is considered as a proxy of social capital. Truly, the percentage vote turnover is the measurement of the level of citizens’ chance to express their preferences, which certainly help to increase governmental responsibility and accountability and thereby government performance. Here, the government is forced to be responsive to citizens’ preferences and the underlying social contract rule, which leads to a higher level of fiscal discipline. Using principal component analysis we construct social capital index that captures both structural and cultural aspects. Fiscal institution in India becomes weak in the post reform era. Group of politicians are much more interest about their local or regional issues than national issues even they are not interested to formulate regional development policy through discussion in the Parliament of India. Here higher value of social index indicates higher level of social trust as proxy of higher social capital. High social capital inversely affects the fiscal performance.

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