Some New Thoughts on Performance Evaluation of Governments: An Application to Indian Cities

Simanti Bandyopadhyay, National Institute of Public Finance and Policy New Delhi

International Center for Public Policy Working Paper Series #1430, Andrew Young School of Policy Studies, Georgia State University.


The present paper is an attempt to build up a framework which can holistically analyse the performance of governments bringing in the financial parameters as well as service delivery. We propose a three step methodology capturing different aspects of performance, integrated in the same framework. We generate the expenditure efficiency scores of governments based on expenditure and service delivery, applying non parametric Data Envelopment Analysis in the first step. This also enables us to identify the possible sources of mis-utilisation of resources on different expenditure heads. The second step consists of a detailed assessment of fiscal patterns of governments with Principal Component Analysis based on revenue, demand, cost, socio-demographic, expenditure-adequacy and service-adequacy indicators. The components generated in the second step can also explain the differences in efficiency scores in resource utilization generated in the first step. Also, each step can generate ranks for the governments. A composite rank from both the steps can act as an index of overall performance of the governments. The methodology is applied to the urban local governments of the state of Tamil Nadu to get some insightful results.