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The Federal Approach to FiscalDecentralisation: Conceptual Contours for Policy Makers

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  • Sharma, Chanchal Kumar

Abstract

Chanchal Kumar Sharma,in his paper demonstrates that in order for fiscal decentralisation to be effective, it must be approached federally. A federal approach is not a decentralised approach but a dynamically balanced approach; one that constantly keeps on adjusting the contrasting forces of centralisation and decentralisation to create a system that can ensure good governance in accordance with the rapidly changing global and local scenario. According to the author, the good governance of the present time has to be federally flexible and dynamically decentralised and institutions of fiscal federalism are crucial for achieving such a dynamic equilibrium. Fiscal decentralisation cannot be detached from the broader principles of fiscal federalism if it is to be successful, irrespective of the fact of whether it is being carried out in a federal or non-federal country. He argues that too much decentralisation or an overly strong central federal government precludes the survival of a constitutional federal state.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 178.

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Date of creation: May 2003
Date of revision: May 2005
Publication status: Published in Loyola Journal of Social Sciences No.(2).Vol. ((2005): pp. 169-188
Handle: RePEc:pra:mprapa:178

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Keywords: Federalism; Fiscal Decentralization; centralization;

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References

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  1. Seabright, Paul, 1996. "Accountability and decentralisation in government: An incomplete contracts model," European Economic Review, Elsevier, vol. 40(1), pages 61-89, January.
  2. WILDASIN, David E., . "Interjurisdictional capital mobility: Fiscal externality and a corrective subsidy," CORE Discussion Papers RP -831, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  3. Yingyi Qian & Barry R. Weingast, 1996. "China's transition to markets: market-preserving federalism, chinese style," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 1(2), pages 149-185.
  4. Shah, Anwar, 2004. "Fiscal decentralization in developing and transition economies: progress, problems, and the promise," Policy Research Working Paper Series 3282, The World Bank.
  5. Persson, Torsten & Tabellini, Guido, 1996. "Federal Fiscal Constitutions: Risk Sharing and Moral Hazard," Econometrica, Econometric Society, vol. 64(3), pages 623-46, May.
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Cited by:
  1. Alina Ligia Dumitrescu, 2013. "The Fiscal Federalism And The Good Economic Governance In European Union," Global Economic Observer, "Nicolae Titulescu" University of Bucharest, Faculty of Economic Sciences & Institute for World Economy of the Romanian Academy, vol. 1(2), pages 25-33, November.
  2. Sharma, Chanchal Kumar, 2008. "Emerging Dimensions Of Decentralization Debate In The Age Of Glocalization," MPRA Paper 6734, University Library of Munich, Germany.
  3. Connelly, John, 2008. "ICT Governance: Towards Federalized Structure and Solution," MPRA Paper 12365, University Library of Munich, Germany.

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