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Comments on the Paper ‘The Optimal Distribution Rule of Federal Funds to States in India: A Suggested Methodology’ by Raychaudhuri and Roy (2021)

Author

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  • Sudip Kumar Sinha

Abstract

The recent paper by Raychaudhuri and Roy (2021) in the South Asian Journal of Macroeconomic and Public Finance has been both timely and intensely thought provoking as it suggests an alternative approach for intergovernmental fiscal transfer in India. Fiscal transfers to subnational governments by the Finance Commissions in India is critical for maintaining the spirit of co-operative fiscal federalism in the country and is designed to improve the overall fiscal health of the economy. Rewarding the states for their efforts in improving public investment management would certainly help make the devolution rules for the Finance Commission time consistent and truly welfare- and growth oriented, and it would also help address the issue of vertical and horizontal gap in a more sustainable manner. JEL Classifications: H77, H71, E62, H72

Suggested Citation

  • Sudip Kumar Sinha, 2022. "Comments on the Paper ‘The Optimal Distribution Rule of Federal Funds to States in India: A Suggested Methodology’ by Raychaudhuri and Roy (2021)," South Asian Journal of Macroeconomics and Public Finance, , vol. 11(2), pages 246-251, December.
    • Handle: RePEc:sae:smppub:v:11:y:2022:i:2:p:246-251
    DOI: 10.1177/22779787221083746
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    More about this item

    Keywords

    Tax and fiscal issues; public finance; applied economic theory; macroeconomics;
    All these keywords.

    JEL classification:

    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures

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