Fiscal Devolution in India: An Overview
JABM, Vol. 5, No. 1, January-June 2013: 105-116
12 Pages Posted: 13 May 2017
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: Suggested Citation