Political Institutions, Fiscal Capacity, and Economic Governance in India: A Political Economy Analysis of Institutional Effectiveness

Abstract

The effectiveness of economic governance depends not only on policy design but on the institutional capacity through which fiscal authority is exercised. In political science and development economics, political institutions have increasingly been recognised as central determinants of economic outcomes. This paper examines the interaction between political institutions and fiscal capacity in India up to 2018 using a political economy framework. Introducing the Institutional–Fiscal Effectiveness Framework (IFEF), the study analyses how institutional credibility, fiscal coordination, and accountability mechanisms shape economic governance performance.

The paper argues that sustainable economic governance is best explained by institutional effectiveness rather than policy ambition alone. By integrating political science and economics, the study contributes to international debates on institutions, governance, and development.