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EconomicsofGovernance
August2003,Volume4,Issue2,pp103114

Soundingthealarm:Impactofpoliticalinstabilityongrowthand
fiscalhealthoftheIndianeconomy
Abstract.
AnoticeablechangeevidentintheIndianpoliticalscenariosincetheeightieshasbeenasharpriseinthefrequency
withwhichgovernmentshavebeenoustedoutofpower.ThisaugurswellforIndiandemocracyasitreflectsa
politicalawakening.Suchchangesingovernment,afteranelectionreflectorderly:transferofpowerandare
inherenttothedemocraticformofgovernance.However,aclosescrutinyofthepoliticalscenarioatthestate
governmentlevelshowsthattherehavebeenveryfrequentchangesingovernmentbetweenelections.Ahigh
frequencyofchangesingovernmentcouldbeexpectedtoresultinfrequentreversalsormodificationsinpolicy
decisionsandhaveadestabilizingeffectontheeconomy.Thepresentstudyisanempiricalexerciseundertakenat
thelevelofstategovernments.Itmakesafirstattempttoexaminetheimpactofpoliticalinstabilityongrowthand
onthefiscalhealthoftheIndianeconomy.
Received:September25,2000/Accepted:January11,2002
RID="*"
ID="*"SincerethankstoProfessorsAjitKarnikandAbhayPethefortheircommentsandsuggestions.Iwouldalso
liketothankthetwoanonymousrefereesfortheirinsightfulcommentsandsuggestions,whichhavebeenofgreat
help.Theusualdisclaimerapplies.
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