Strengthening Local Governments

This paper evaluates the fiscal success of recent efforts towards reforming and strengthening rural governments in India through the process of rural decentralisation initiated with the 73rd Constitutional Amendment Act in 1992. It measures the extent of fiscal decentralisation that has taken place in order to evaluate how far the rural governments have effective control over expenditure decision-making. The analysis is based on budget data of rural governments in seven Indian states for the decade of the 1990s and presents recommendations to make fiscal decentralisation more effective.