Abstract
The benefit of Indian economic growth has not affected every state in country in an even manner. If this situation is allowed to continue, growth would benefit only a small section of the population and this would have serious social and political consequences. Amongst the many factors that impact the growth of the economy of a state is the status of its public finances. The state of public finances make up the environment within which investment decisions are taken and there is sufficient evidence to show that adverse fiscal balance acts as a deterrent to investment. Hence an attempt is made to assess the public finances of fourteen major states of India for the pre-reform and post-reform periods. To evaluate fiscal performance of a state, non-conventional fiscal imbalance measures such as Resource Gap I, Resource Gap II, Basic Resource Gap I, Basic Resource Gap II, Basic Resource Gap III, Fiscal Dependency Ratio I, Fiscal Dependency Ratio II, Fiscal Dependency Ratio III and Fiscal Stress Ratio have been used.
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