An autonomous research institute under the Ministry of Finance

 

Working papers

Covid19 and Public Finance for Children: A case study of State of Odisha, India

  • Jan, 2022
  • Authors Amandeep Kaur and Lekha Chakraborty
  • Details NIPFP Working Paper No. 368
  • Abstract
    Against the backdrop of covd-19 pandemic, the paper analyses the budgetary allocations pertaining to children, for the state of Odisha. The State of Odisha is consistently using Public Financial Management (PFM) tools for human development to ensure budget transparency and accountability. Our findings suggest that Odisha spent around 5 per cent of GSDP on child budgeting during 2019-20 to 2021-22. The fiscal marksmanship analysis and the PEFA scores of sector-specific child budgeting reveal deviation between budget estimates and actuals in a few sectors. Higher budgetary allocation for children per se does not translate into higher actual spending. Strengthening budget accountability is therefore crucial for better human development outcomes for children. 
     
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Fiscal Illusion and Wagner’s Law: Evidence from Indian Subnational Finances

  • Jan, 2022
  • Authors Bhabesh Hazarika and Dinesh Kumar Nayak
  • Details NIPFP Working Paper No. 367
  • Abstract
    In recent decades, public spending both at the Union and Subnational Governments in India has been increased by manifold. Often the taxpayers systematically misperceive their tax burden as well as benefits received from the publicly provided public goods and services. This leads to fiscal illusion, i.e., they demand more public goods than they would if they had complete information resulting in a higher public spending than the desired level. The present paper analyses the subnational finances in India in search of evidence of fiscal illusion and flypaper effects as well as the validity of Wagner’s law in explaining the increased public spending over the decades. Panel data from 1980-81 to 2019-20 for 20 subnational governments of India were analysed using second-generation panel unit root, and cointegration approaches accounting for the cross-sectional dependence and heterogeneity. The results of the PMG estimation provide evidence for the existence of fiscal illusion induced by intergovernmental transfers and fiscal deficit and a flypaper effect. While the validity of Wagner’s law becomes weak when controlled for intergovernmental transfers and fiscal deficit, the degree of publicness of public spending is found to be low at the subnational level in the country. The increased reliance on the transfers has become a norm for many states, especially the north-eastern and hilly states having implications for the own tax collection at the subnational level, and as a result, the fiscal gap has become larger and larger.
     
    Key words: Public Spending; Fiscal Illusion; Flypaper Effects; Wagner’s Law; Second-generation Panel Unit Root and Cointegration Approach
    JEL Classification: C23; H40; H72; H77
     
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Designing a sound GRM: Principles and International Experience

  • Jan, 2022
  • Authors Sudipto Banerjee and Aditi Dimri
  • Details NIPFP Working Paper No. 366
  • Abstract
    Grievance redress mechanism (GRM) is an essential component of the consumer protection framework in the financial sector. Its presence and performance can have far-reaching effects on the participation of consumers in the financial sector. UsingGRM a consumer can seek expeditious and fair remedy against the wrongs of the financial service providers. While there are various forms of GRM (both judicial and non-judicial), in this paper, we study the design of a non-judicial redress agency. Using first principles we study the design of a financial redress agency by focusing on the critical organisational decisions of — manner of establishment, governance, funding, dispute resolution processes, and performance evaluation. We build on two strands of literature, one studying the GRM design at a conceptual principles level and the other providing practical guidance for setting up a redress agency. Further, the paper analyses four different redress agencies, namely, — Financial Ombudsman Services Scheme in the U.K., Kifid in the Netherlands, Consumer Financial Protection Bureau in the U.S., and Insurance and Financial Services Ombudsman Scheme in New Zealand. The paper contributes by assimilating all the varied resources to map principles, decisions, and case studies to provide an accessible yet comprehensive introduction to designing a GRM for a varied readership.
     
    Keywords: GRM, redress agency, financial ombudsman, dispute resolution, consumer protection in finance
     
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Issues concerning Grievance Redress Mechanism (GRM) in Indian financial regulators

  • Jan, 2022
  • Authors Karan Gulati and Karthik Suresh
  • Details NIPFP Working Paper No. 364
  • Abstract
    This paper aims to measure and understand the performance of Indian financial sector regulators vis-a-vis grievance redress. This is based on learnings from international best practices. It looks at the structure and policy apparatus of redress systems of financial regulators and the challenges consumers face while accessing them. Regulators differ in their approaches to grievance redress mechanisms, face conflicts of interest, and follow complicated processes. They also take too long to resolve grievances and do not have a defined point of closure. The regulations are often not accessible to consumers, and when they are, they are difficult to understand. This implies a need to simplify the procedure, better inform consumers, and include enforcement provisions to enable greater grievance redress.
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Do Indian financial firms have a robust Grievance Redress Framework in place?

  • Jan, 2022
  • Authors Vimal Balasubramaniam, Renuka Sane, Mithila Sarah and Karthik Suresh
  • Details NIPFP Working Paper No. 365
  • Abstract
    A rapid expansion in the Indian financial sector has necessitated a growing focus on improving customer service which also includes the delivery of a robust Grievance Redressal Mechanism (GRM). A GRM is a formal system through which complaints are resolved in a time-bound manner, thus improving public service delivery in the financial system. This paper assesses the GRM policy content that is available on the website of 21 financial service providers in India. The firms include the top three firms by market share in each sector - banking, insurance, pensions, payments, mutual funds, and brokerages. Financial firms differ in their performance across different metrics, highlighting areas for improvement with rievance redress processes with financial services providers (FSP).
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