ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Fiscal Policy and Development in Madhya Pradesh

The greatest damage of the influence of neo-liberal macroeconomic advice from the Asian Development Bank is its emphasis on 'self-sufficient' state governments exercising 'fiscal discipline'. Obviously wasteful expenditure is a bad thing. State governments must reduce the slack in resource mobilisation and expenditure. This however is not the fundamental problem for Madhya Pradesh today. The problem is that MP has too little public investment and a low growth of state income, etc. There is little merit in the argument in favour of a smaller or zero fiscal deficit, if the spending is aimed towards increasing state income and employment.

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