Revisiting fiscal performance of non-special category states of India: a global Malmquist index approach

Purpose This paper aims to analyse the fiscal performance of non-special category states of India. Design/methodology/approach This study applied a global Malmquist productivity index (GMPI) to measure the state fiscal performance, using eight fiscal indicators to measure the fiscal stance of 17 non-special category states of India over the period 2000–2020. Findings The findings reveal significant inter-state variations in all the fiscal indicators over the period. Goa, Haryana, Kerala, Chhattisgarh, Odisha and Jharkhand have been the best fiscal performers in recent years. The states Chhattisgarh, Jharkhand and Odisha present an interesting case; their fiscal performance index (productivity) score increased more than 1% during the sample period as compared to other states. This improvement is primarily associated with revenue efficiency, expenditure quality and size of capital outlay. Research limitations/implications The conventional Malmquist productivity index uses a geometric mean form of two contemporaneous measures of productivity change and this index faces a potential linear programming infeasibility problem in measuring cross-period directional distance functions. Therefore, productivity growth measured using indexes should be interpreted with caution. Therefore, the results obtained based on the GMPI might be missing the sensitive check. Originality/value This study is a pioneering initiative in India, constructing a fiscal performance index to measure and rank the non-special category states of the country based on GMPI, thus addressing limitations in previous studies on index formation techniques and selecting fiscal indicators.