India has experienced rapid economic growth over the past two decades, averaging about 6% per year. Sustaining and accelerating this progress, as per the country’s development targets, will require an improvement in government effectiveness, not only at the central but also at the state level, given the extensive responsibilities of India’s state governments for infrastructure and human development. But fiscal deterioration, especially acute in the late nineties, has weakened the development effectiveness of state governments in India by squeezing productive spending and reducing its quality, especially in the poorer states.
This stock-taking report aims both to share the lessons of state-level fiscal reforms in India to date, and to suggest what more can be done.
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