This paper investigates the impact of government size on economic growth across 23 states in India between 2005 and 2014 for varying degrees of quality of institutions. Using pooled OLS, panel random effects estimation, as well as system-GMM estimation techniques, we find that in general, akin to findings in the literature, a bigger government is detrimental for state-level economic growth. However, the extent of the negative growth impact depends on the quality of institutions of the states, measured by a newly available index. States that have better quality of institutions register a lower negative impact on economic growth compared to their less progressive counterparts for similar increase in government size. Also, reduction in non-development government expenditure has a better growth impact compared to reduction in development government expenditure, especially for higher levels of institutional quality. Our results, that are robust to various specifications of government size, quality of institutions and estimation techniques, lead us to conclude that state governments should emphasize on quality of institutions to enhance state-level economic growth.

Globally, ~1 billion people, mostly residing in Africa and South Asia (e.g. India), still lack access to clean drinking water and sanitation. Resulting, unsafe disposal of fecal waste from open-defecation to nearby drinking water sources severely endanger public health. Until recently, India had a huge open-defecating population, leading declining public health from water-borne diseases like diarrhoea by ingesting polluted water, mostly sourced to groundwater. However, in recent past, sanitation development to achieve Sustainable Development Goals (SDGs) has been encouraged throughout India, but their effect to groundwater quality and human health conditions are yet-unquantified. Here, for the first time, using long term, high-spatial resolution measurements (>1.7 million) across India and analyses, we quantified that over the years, groundwater fecal coliform concentration (2002–2017, −2.56 ± 0.06%/year) and acute diarrheal cases (1990–2016, −3.05 ± 0.01%/year) have significantly reduced, potentially influenced by sanitation development (1990–2017, 2.63 ± 0.01%/year). Enhanced alleviation of groundwater quality and human health have been observed since 2014, with initiation of acceletated constructions of sanitation infrastructures through Clean India (Swachh Bharat) Mission. However, the goal of completely faecal-pollution free, clean drinking water is yet to be achieved. We also evaluated the suitability of using satellite-derived night-time light (NLan, 1992–2013, 4.26 ± 0.05%/year) as potential predictor for such economic development. We observed that in more than 80% of the study region, night-time light demonstrated to be a strong predictor for observed changes in groundwater quality, sanitation development and water-borne disease cases. While sanitation and economic development can improve public health, poor education level and improper human practices can strongly influence on water-borne diseases loads and thus health in parts of India.

Due to unavailability of consistent income data at the sub-state or district level in developing countries, it is difficult to generate consistent and reliable economic inequality estimates at the disaggregated level. To address this issue, this paper employs the association between night time lights and economic activities for India at the sub-state or district-level, and calculates regional income inequality using Gini coefficients. Additionally, we estimate the relationship between night time lights and socio-economic development for regions in India. We employ a newly available data on regional socio-economic development (Social Progress Index), as well as an index that represents institutional quality or governance. Robust to the choice of socio-economic development indicators, our findings indicate that regional inequality measured by night time lights follow the Kuznets curve pattern. This implies that starting from low levels of socio-economic development or quality of institutions, inequality rises as regional socio-economic factors or quality of institutions improve, and with subsequent progress in socio-economic factors or quality of institutions, regional inequality declines.

Inflation expectations are an important marker for the conduct of monetary policy. Using a Bayesian structural VAR-X model we analyze the macroeconomic factors that determine inflation expectations of the general public in India.Besides the standard macroeconomic factors such as output, inflation rate, monetary policy, and exchange rate, we include economic policy uncertainty as an endogenous variable, while international factors such as oil prices and financial volatility that have spill-over effects are included as exogenous variables. We find that oil prices and the exchange rate have considerable effects on expectations of inflation, and that in a longer horizon, international financial volatility also matters. Our model generates results free from the "price puzzle" and the "exchange rate puzzle" that otherwise exist in the literature on monetary transmission mechanisms for India.

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