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AbstractProminent reform agendas for aid abound. How do they relate to each other? This article tries to organise the aid reform literature by proposing a general framework for thinking about the determinants of aid effectiveness and strategies for improving the same. It presents three schools of thought on aid effectiveness: the recipient, donor and transaction costs schools. It argues that none of the reform agendas proposed by these schools dominates. Although actual aid reform agendas will combine elements of all three schools, there are in fact important tradeoffs between the recipient and the donor school reform agendas, and between the transaction costs and the donor school reform agendas. Contrary to the clarion calls of prominent aid reform advocates, aid reform in practice is a messy and difficult business.

India, home to more than one billion people, has experienced rapid growth over the past decade, averaging about six percent per year between 1992/93 and 2003/04. The agenda backed in this report is one that receives widespread support from both the central and state governments in India. The fiscal stress of the late nineties gave rise to an intense state-level reform effort. Six years on, this report documents the many initiatives undertaken by the states to restore fiscal sustainability, and become more effective agents of development. It outlines successes, lessons learnt, and highlights further challenges, on both the expenditure side (chapter two) and the revenue side (chapter three). It also looks at the incentive framework within which the states operate (chapter four), and asks whether there is a feasible reform package that will take the states not only out of fiscal crisis, but strengthened to meet the development challenges which confront them. This chapter provides the context for what follows by outlining the role and increasingly divergent performance of the state governments (section two), and then in turn, the genesis of the fiscal crisis (section three), its developmental impact (section four), the reform response of the state and central governments (section five), and the reform challenges facing the states today (section six). Although associated with an increase in public spending, the fiscal crisis weakened the developmental and poverty impact of state governments, especially in the poorer states; it also called into question India's overall fiscal sustainability. This report is written to help share the lessons and success-stories to date, and to assist states and the central government in implementing the national agenda of state-level fiscal stabilization and empowerment. Given the low levels and the worrying recent trends in both the quantity of expenditure in priority expenditure areas, and the quality of expenditure across the board, there is an urgent need for expenditure ...

In large countries with multilevel fiscal systems, effective pursuit of reforms relating to integration, deregulation and natural resource management requires active participation of and coordination with subnational governments. While most of the existing literature is about the reform of federalism, the volume is about reform through federalism. It explores federal reform strategies, that is, ways in which central governments can motivate, influence and ensure coordination of subnational policies. It covers such mechanisms as the imposition of conditions on earmarked funding from central to subnational governments, the provision of incentive funding awarded if certain reforms are undertaken, the development of cross-government agreements, and centralization of power from the subnational level to the central government. The study examines both successes and failures by analysing a range of case-studies, drawn mainly from India and Australia but also covering Indonesia and China. It not only fills the existing gap in the literature relating to federal reform strategies, but also attempts to build a typology of strategies and draws lessons from experience.

On 9 September 2007, Australian government ministers and the Indonesian president announced a A$100 million Kalimantan Forests and Climate Partnership (KFCP). This would involve protecting 70,000 hectares of peat forests, reflooding 200,000 hectares of dried peatland, and planting 100 million trees in Central Kalimantan, Indonesia. Since then, the ambitions of the KFCP have been quietly but drastically scaled back. The area expected to be reflooded by the project is now just over 10 per cent of the original target. And little progress has been made on the ground. Four years on, blocking of the large canals required for reflooding has yet to commence, and only 50,000 trees have been planted. What has happened to what was labelled at its launch as "a very real and very practical contribution", one that would yield "immediate and tangible results"? We analyse the KFCP both as an aid "announceable" and as a REDD project, and reach two main conclusions. First, the KFCP illustrates the damage that an emphasis on " announcing" new projects, and a lack of attention to reporting on project progress, can cause to aid. Not enough has been done to publicly reposition the KFCP as a much smaller, demonstration project.

Outgoing Indonesian president Susilo Bambang Yudhoyono's second-term record is creditable, measured against the targets he set himself in 2010, but deficient in key areas: economic reform, infrastructure investment, and anti-corruption. Indonesia's 2009-14 parliament has been active in economic policymaking, and will leave as its legacy a raft of protectionist legislation. Both presidential candidates, Joko 'Jokowi' Widodo and Prabowo Subianto, have appealed to nationalism in their campaigns, calling for Indonesia to assert its sovereignty and increase its self-sufficiency, but Jokowi's economic platform is more moderate and economically literate than Prabowo's. The incoming president will inherit an economy that continues to slow. Growth is now not expected to approach 6% until 2015 at the earliest. Having engineered a reduction in the current account deficit, Indonesian policymakers now face the more difficult problem of structural fiscal adjustment. Energy subsidies are the most immediate problem, but fiscal reform more generally will emerge as an overriding and unpleasant imperative for whoever wins the presidential election on 9 July. Unless difficult fiscal policy measures are taken, Indonesia will face major trade-offs between deficit control and investment in social programs and economic infrastructure. The new president will struggle to restrict the deficit to the cap of 3% of GDP: a balanced budget will likely not be feasible for several years. He will need to increase the ratio of revenue to GDP and eliminate fuel subsidies-through a more systematic approach than the infrequent price increases of the past. He will need to choose carefully between competing expenditure priorities, such as infrastructure and defence. The new president would also be well advised to tread cautiously in implementing the legal mandates he will inherit, and to work with parliament to avoid further and unwind current earmarking of public expenditure. ; Copyright Information: © 2014 Indonesia Project ANU ; Copyright Information: © 2012 Indonesia Project ANU

Outgoing Indonesian president Susilo Bambang Yudhoyono's second-term record is creditable, measured against the targets he set himself in 2010, but deficient in key areas: economic reform, infrastructure investment, and anti-corruption. Indonesia's 2009-14 parliament has been active in economic policymaking, and will leave as its legacy a raft of protectionist legislation. Both presidential candidates, Joko 'Jokowi' Widodo and Prabowo Subianto, have appealed to nationalism in their campaigns, calling for Indonesia to assert its sovereignty and increase its self-sufficiency, but Jokowi's economic platform is more moderate and economically literate than Prabowo's. The incoming president will inherit an economy that continues to slow. Growth is now not expected to approach 6% until 2015 at the earliest. Having engineered a reduction in the current account deficit, Indonesian policymakers now face the more difficult problem of structural fiscal adjustment. Energy subsidies are the most immediate problem, but fiscal reform more generally will emerge as an overriding and unpleasant imperative for whoever wins the presidential election on 9 July. Unless difficult fiscal policy measures are taken, Indonesia will face major trade-offs between deficit control and investment in social programs and economic infrastructure. The new president will struggle to restrict the deficit to the cap of 3% of GDP: a balanced budget will likely not be feasible for several years. He will need to increase the ratio of revenue to GDP and eliminate fuel subsidies-through a more systematic approach than the infrequent price increases of the past. He will need to choose carefully between competing expenditure priorities, such as infrastructure and defence. The new president would also be well advised to tread cautiously in implementing the legal mandates he will inherit, and to work with parliament to avoid further and unwind current earmarking of public expenditure.

On 9 September 2007, Australian government ministers and the Indonesian president announced a A$100 million Kalimantan Forests and Climate Partnership (KFCP). This would involve protecting 70,000 hectares of peat forests, reflooding 200,000 hectares of dried peatland, and planting 100 million trees in Central Kalimantan, Indonesia. Since then, the ambitions of the KFCP have been quietly but drastically scaled back. The area expected to be reflooded by the project is now just over 10 per cent of the original target. And little progress has been made on the ground. Four years on, blocking of the large canals required for reflooding has yet to commence, and only 50,000 trees have been planted. What has happened to what was labelled at its launch as "a very real and very practical contribution", one that would yield "immediate and tangible results"? We analyse the KFCP both as an aid "announceable" and as a REDD project, and reach two main conclusions. First, the KFCP illustrates the damage that an emphasis on " announcing" new projects, and a lack of attention to reporting on project progress, can cause to aid. Not enough has been done to publicly reposition the KFCP as a much smaller, demonstration project.