Federal Transfers and the Tax efforts of the States in India
AbstractThe paper has examined the the impact of federal fiscal transfers on the budget of the state (sub-central) governments in India. The relationship between the federal fiscal transfers and the tax efforts of the 14 major Indian states have been anlysed for fifteen years (from 1970-71 to 1984-85)through a panel dadat set. Fixed efeect model and its variants have been employed. The study found that the federal transfers have dampaned the tax efforts of states in India. Hence, a hiher weightaege for the 'tax effort criterion' has been suggested in the vertical devolution formula of the Indian Finance Commission to ensure efficiency.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 3208.
Date of creation: Dec 1999
Date of revision:
Publication status: Published in Indian Economic Journal part 4.volume(2000): pp. 101-110
Federal Transfers; Tax Efforts; Fiscal Federalism in India; Efficiency; Vertical fiscal balance;
Find related papers by JEL classification:
- H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
- H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
- H7 - Public Economics - - State and Local Government; Intergovernmental Relations
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- Edward M. Gramlich & Harvy Galper, 1973. "State and Local Fiscal Behavior and Federal Grant Policy," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 4(1), pages 15-66.
- Shah, Anwar, 1991. "Perspectives on the design of intergovernmental fiscal relations," Policy Research Working Paper Series 726, The World Bank.
- Richard A. Musgrave, 1961. "Approaches to a Fiscal Theory of Political Federalism," NBER Chapters, in: Public Finances: Needs, Sources, and Utilization, pages 97-134 National Bureau of Economic Research, Inc.
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