Friday, September 30, 2022


Module 1: Rationale for Public Policy

Allocation of resources – Provision of public goods; Voluntary exchange models; Impossibility of

decentralized provision of public goods (contributions of Samuelson and Musgrave); Demand

revealing schemes for public goods – Tiebout model, theory of club goods; Stabilization Policy –

Keynesian case of stabilization policy; Uncertainty and expectations; Failure of inter temporal

markets; Liquidity preference; Social goals; Poverty alleviation; Provision of infrastructural

facilities, removing distributional inequalities and regional imbalances.

Module 2: Public Expenditure

Wagner’s law of increasing state activities; Wiseman-Peacock hypothesis; Pure theory of

public expenditure; Structure and growth of public expenditure; Criteria for public investment;

Social cost-benefit analysis – Project evaluation; Estimation of costs, discount rate; Reforms in

expenditure budgeting; Programme budgeting and Zero base budgeting.

Module 3: Taxation

Theory of incidence; Alternative concepts of incidence – Allocative and equity aspects of individual

taxes; Benefit and ability to pay approaches; Theory of optimal taxation; Excess burden of taxes;

Trade-off between equity and efficiency; Theory of measurement of dead weight losses; The

problem of double taxation.

Module 4: Public Debt

Classical view of public debt; Compensatory aspect of debt policy; Burden of public debt; Sources of

public debt; Debt through created money; Public borrowings and price level; Crowding out of

private investment and activity; Principles of debt management and repayment.

Module 5: Fiscal Policy

Objectives of fiscal policy – full employment, anti-inflation, economic growth, redistribution of

income and wealth; Interdependence of fiscal and monetary policies; Budgetary deficit and its

implications; Fiscal policy for stabilization – Automatic vs discretionary stabilization; Alternative

measures of resource mobilization and their impact on growth, distribution and prices; Balanced

budget multiplier.

Module 6: Fiscal Federalizm

Principles of multi-unit finance; Fiscal federalism in India; Vertical and horizontal imbalances;

Assignment of function and sources of revenue; Constitutional provisions; Finance Commission;

Devolution of resources and grants; Theory of grants; Resource transfer from Union to States –

Criteria for transfer of resources; Centre-State financial relations in India; Problems of

states’resources and indebtedness; Transfer of resources from Union and States to local bodies.

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