Revenue incentives at the third tier.

Given the poor level of exploitation in most states of even such sources of revenue as have been legislatively assigned to the fiscal domain of panchayati raj institutions, the most important issue is that of incentives for own revenue collection. Incentives can be built into the design of State-local transfers by deducting local revenue potential from closed-ended grant entitlements, thus deeming local collections as having been realised (upto some stipulated fraction of potential if need be). Such a system can work only if the assessment of revenue potential across panchayat jurisdictions is perceived as cross-sectionally fair, and if it carries minimal costs of assessment for the State government. The jurisdiction-specific indicator must also not carry policy endogeneity, with adverse incentives for provision of public services by PRIs. The paper examines these issues and suggests a way by which the revenue potential can be quantified in an operationally useful way, without adverse incentives. The paper also examines whether State governments should be incentivised by the Centre to implement decentralisation and encourage own revenue generation by PRIs.Revenue potential ; Panchayati raj institutions

Fiscal developments and outlook in India.

The paper identifies those elements in the configuration of fiscal parameters confronting the country that give cause for concern, and examines whether the fiscal reform measures taken address these adequately. The primary fiscal indicators consolidated across Central and state governments over the last fifty years, normalised by GDP and taken in first differences, are examined for evidence of countercyclical fiscal policy, and election-year profligacy. The underlying structural cause of fiscal stress since the start of reform in FY92 is then identified, as the uncompensated loss of trade tax revenues. This has led to a fall in the tax/GDP ratio, amounting by FY02 to two percent of GDP relative to the all-time peak of 16 percent achieved in FY90 (there is provisional evidence however of an upturn in FY03 by one percent). Finally, the two major fiscal reforms initiated in FY00 are examined. One is the accounting change whereby `small savings', a supply-driven automatic borrowing channel, were re-routed into a newly created National Small Savings Fund, independently of the budget. Although just an accounting change, it had a profound effect in terms of signalling the need for financial viability in the small savings scheme, and thus eroding embedded political economy pressures in the system that served to keep up interest rates. The second major reform is the fiscal responsibility legislation that has been enacted by the Centre, and four state governments so far. Simulated outcomes show that without an improvement in revenue effort, the required fiscal compression of non-interest revenue expenditure is so extreme that it could well result in political turbulence. That could then feed back through the election-year compulsions revealed in the regression analysis to worsening fiscal discipline again. The paper concludes that improved revenue effort is key to fiscal reform in India.Revenue effort ; Election-year profligacy ; Political economy of federations ; Fiscal responsibility legislation

Impact of grants on tax effort of local government.

Tax effort ; Flypaper effect

Tracking functional devolution by states to panchayats.

The Eleventh Schedule added to the Constitution by the Seventy-third Amendment lists twenty-nine functions developable by States to Panchayati Raj Institutions (PRIs). States were free to set the speed and design of their approach to decentralization under the general framework of the Constitutional mandate. Fourteen years on, a quantitative measure is attempted in this paper of the extent to which functional transfers have been achieved through the budgetary transfer of funds, with respect to the fiscal year 2006-07, in four states: Madhya Pradesh, Chhattisgarh, Rajasthan and Orissa. The approach taken here is thus radically different from that in official documents, where functional transfer to PRIs is dealt with in a purely qualitative manner, based on administrative notifications. Without an associated budgetary provision these do not carry any operational significance.Function devolution ; Rural local bodies

Time-series properties of state-level public expenditure.

Public expenditure reform must be underpinned by some understanding of the time-series properties of public expenditure. This paper examines the univariate properties of aggregate revenue expenditure at the level of State governments in India over the period 1974-98 for three states: Punjab, Haryana and Maharashtra. The empirical exercise is performed on the logarithmic transformation of aggregate revenue expenditure in terms of nominal (rather than ex post real) expenditure, not normalised to State Domestic Product, for reasons justified in the paper, and is confined to the aggregate for lack of a breakdown of the series by economic classification. The data are adjusted for notional entries and other distortionary budgetary practices. There is trend stationarity in Punjab and Haryana, with a deterministic trend growth rate of 16-17 per cent, and clear evidence thereby of fiscal smoothing in the presence of periodic upward shocks of Pay Commission or other origin. In Maharashtra by contrast, aggregate expenditure carries a unit root, with no deterministic trend, and no drift term; expenditure shocks of other than Pay Commission origin appear to have been enabled with no corresponding smoothing, but there is sharp and concurrent smoothing at the time of the Pay Commission shocks, such that aggregate expenditure does not show a spike. The issue of whether the fiscal smoothing in each case was unproductive or productive remains unrevealed in the aggregate figures.

Tax Buoyancy Estimates for Indian States

With the introduction of a destination-based VAT in all but eight states starting April 2005, there is need for a good baseline indicator of tax buoyancies in states in the period immediately preceding. This to provide such a base, with buoyancies estimated over a 23-year span starting in 1980-81. If estimated over a sufficiently long period of time, the buoyancy coefficient essentially estimates the underlying revenue-generating properties of the system with endogenised tax policy. A log linear trend fit over the entire period showed serial correlation, which is eliminated for all but one state, Assam, with the introduction of structural breaks. A third specification, including the log of the per cent share of industry in the domestic product, eliminates serial correlation for Assam, and improves the goodness-of-fit for some other states. In all but six states, the sign of the change in the buoyancy coefficient at the break is positive. Where the buoyancy-enhancing break occurs in the late 1990s, the spurt in tax effort might have been an endogenous response to the expenditure shock from implementation of the higher salary scales recommended by the Fifth Pay Commission

Introduction: Toward an Engaged Feminist Heritage Praxis

We advocate a feminist approach to archaeological heritage work in order to transform heritage practice and the production of archaeological knowledge. We use an engaged feminist standpoint and situate intersubjectivity and intersectionality as critical components of this practice. An engaged feminist approach to heritage work allows the discipline to consider women’s, men’s, and gender non-conforming persons’ positions in the field, to reveal their contributions, to develop critical pedagogical approaches, and to rethink forms of representation. Throughout, we emphasize the intellectual labor of women of color, queer and gender non-conforming persons, and early white feminists in archaeology

Tackling Agriculture in a Developing Country: a Proposal for India

More effective taxation of agriculture is central to the development issue. An OLS cross-country regression across developing countries shows that every one percent increase in the share of agriculture in value addition lowers the tax/GDP ratio by a little over one-third of one percent, after controlling for shares of imports and services. The paper goes on to argue that agriculture can become possible, if never easy, to tax if it is attempted at the lowest, local level of subnational government. The information vacuum that confounds any attempt to tax agriculture is least formidable at local level, and compliance incentives exist when taxes paid are seen to feed into provision of productivity-enhancing local public goods. The paper provides a feasible design for a simple norm-based crop-specific tax on agricultural land leviable at local level, and provides estimates of the levy range for different regions of India. The recommendation carries general validity even for non-federal developing countries, provided local government institutions exist in rural areas, analogous to those in cities. Working Paper Number 03-22