Fiscal Federalism in India

The book has examined the composition and growth of resource transfer from the Union to the state governments in India during the last 25 years especially in the reforms period. Given the key macroeconomic objectives of reducing fiscal imbalances and regional disparity, an attempt has been made to assess the impact of intergovernmental resource transfer on different categories of states. In addition, efforts have been made to examine the role of statutory and non-statutory transfers in the process of economic development of a developing state in India. The empirical evidence reveals relatively high per capita resource transfer to the low income states as compared to their developed counterparts. In spite of relatively more resource transfer, the low income states are still lagging behind the high income states. In the absence of accountability and transparency, mere inter-governmental resource transfer may not necessarily improve the fiscal health of the sub-national economy. Non-adoption of fiscal prudence to contain unproductive expenditure and absence of sincere efforts to mobilize adequate own resources can very well aggravate the fiscal scenario of the state.