Fiscal Devolution in India: An Overview

JABM, Vol. 5, No. 1, January-June 2013: 105-116

12 Pages Posted: 13 May 2017

See all articles by Venkatamuni Reddy

Venkatamuni Reddy

Manipal Academy of Higher Education

Date Written: June 12, 2013

Abstract

Fiscal federalism is the most popular form of organization of governments for the provision of public goods. Organization of a multitier governmental structure requires assignments of resources and responsibilities to each tier. The theoretical framework of fiscal federalism provides the principles for addressing this assignment issue. Inter-governmental transfers constitute an important policy instrument in fiscal federalism that can serve a number of different functions. The evolution and development of fiscal federalism in India demonstrates fiscal imbalances that are to be addressed with effective policy instruments. Fiscal transfers to the states and local governments are generally governed by Central Finance Commission while the plan grants are channelized by mainly Planning Commission. Thus, both the bodies play crucial role in fiscal devolution and addressing the issues of regional equity. Present paper purports to examine the criterion of fiscal devolution, adopted by different Finance Commissions in India. The paper highlights the emerging trends and perspective pertaining to fiscal devolution in India.

Keywords: fiscal Devolution, Central Financial Commission

JEL Classification: B10, C20

Suggested Citation

Rayalacheruvu, Venkatamuni, Fiscal Devolution in India: An Overview (June 12, 2013). JABM, Vol. 5, No. 1, January-June 2013: 105-116, Available at SSRN: https://ssrn.com/abstract=2967157

Venkatamuni Rayalacheruvu (Contact Author)

Manipal Academy of Higher Education ( email )

Department of Commerce
MIT Campus
Manipal, 576104
India
+919686416733 (Phone)

HOME PAGE: http://https://manipal.edu/doc/department-faculty/faculty-list/venkatamuni-reddy.html

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