IDEAS home Printed from https://ideas.repec.org/a/sae/pubfin/v43y2015i1p53-81.html
   My bibliography  Save this article

Federal Transfers and Fiscal Discipline in India

Author

Listed:
  • Antra Bhatt

    (Dipartimento di Economia Diritto e Istituzioni, Università di Roma Tor Vergata, Rome, Italy
    Research and Development, Tata Institute of Social Sciences, Mumbai, Maharastra, India)

  • Pasquale Scaramozzino

    () (Dipartimento di Economia Diritto e Istituzioni, Università di Roma Tor Vergata, Rome, Italy
    Department of Financial and Management Studies, SOAS, University of London, UK)

Abstract

This article examines the relationship between federal transfers and fiscal deficits in India. The current system of transfers has been criticized on the grounds that it distorts the incentives for states to promote fiscal discipline. We analyze the relationship between transfers, state domestic product, and fiscal deficit for a panel of states during the period 1990 to 2010. The article finds a positive long-run relationship and bidirectional causality between primary/gross fiscal deficits and non-plan transfers. Further, there is a negative long-run relationship and one-way causality from state domestic product to transfers. These results are confirmed by multivariate cointegration analysis, which finds a long-run relationship between fiscal transfers, state product per capita, and state primary deficit. The evidence in the article is consistent with the system of fiscal transfers being “gap filling.â€

Suggested Citation

  • Antra Bhatt & Pasquale Scaramozzino, 2015. "Federal Transfers and Fiscal Discipline in India," Public Finance Review, , vol. 43(1), pages 53-81, January.
  • Handle: RePEc:sae:pubfin:v:43:y:2015:i:1:p:53-81
    as

    Download full text from publisher

    File URL: http://pfr.sagepub.com/content/43/1/53.abstract
    Download Restriction: no

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bhatt Hakhu, Antra & Piergallini, Alessandro & Scaramozzino, Pasquale, 2014. "Public Capital Expenditure and Debt Dynamics: Evidence from the European Union," MPRA Paper 62827, University Library of Munich, Germany.
    2. Yongqiu Wu & Yi Huang & Jing Zhao & Yanping Pu, 2017. "Transfer payment structure and local government fiscal efficiency: evidence from China," China Finance and Economic Review, Springer, vol. 5(1), pages 1-15, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:pubfin:v:43:y:2015:i:1:p:53-81. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (SAGE Publications). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.