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Determining General And Specific Purpose Transfers: An Integrated Approach

Author

Listed:
  • Richa Saraf

    (Madras School of Economics)

  • D K Srivastava

    (Madras School of Economics)

Abstract

This study attempts to provide an alternative methodology to calculate the horizontal equalization transfers. This methodology follows the Australian horizontal equalization principle using a panel model methodology where both revenue and expenditure side considerations are involved. First, it applies the Canadian model in calculating the fiscal capacity equalization. Then the expenditure side equalization has been carried out for two services - education and health. Results of the exercise indicate that the transfers suggested by the panel model are more progressive than the TFC recommended transfers.

Suggested Citation

  • Richa Saraf & D K Srivastava, 2009. "Determining General And Specific Purpose Transfers: An Integrated Approach," Working Papers 2009-040, Madras School of Economics,Chennai,India.
    • Handle: RePEc:mad:wpaper:2009-040
    as

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    File URL: http://www.mse.ac.in/wp-content/uploads/2016/09/working-paper-40.pdf
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    References listed on IDEAS

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    1. Robin W. Boadway & Frank R. Flatters, 1982. "Efficiency and Equalization Payments in a Federal System of Government: A Synthesis and Extension of Recent Results," Canadian Journal of Economics, Canadian Economics Association, vol. 15(4), pages 613-633, November.
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    3. A. D. Scott, 1952. "Federal Grants and Resource Allocation," Journal of Political Economy, University of Chicago Press, vol. 60, pages 534-534.
    4. Rangarajan, C. & Srivastava, D.K., 2004. "Fiscal transfer in Canada: Drawing comparisons and lessons," Working Papers 04/18, National Institute of Public Finance and Policy.
    5. Ross Garnaut, 2002. "Equity and Australian Development: Lessons from the First Century," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 35(3), pages 227-243, September.
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    7. Ross Garnaut & Vince FitzGerald, 2002. "Issues in Commonwealth–State Funding," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 35(3), pages 290-300, September.
    8. Peter B. Dixon & Mark R. Picton & Maureen T. Rimmer, 2002. "Efficiency Effects of Inter–Government Financial Transfers in Australia," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 35(3), pages 304-315, September.
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    Cited by:

    1. K. Shanmugam & K. R. Shanmugam, 2022. "Equalisation Transfers Based on Spending Needs and Fiscal Capacity of State Governments in India," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 16(2), pages 139-165, May.
    2. Jyotsna Rosario & K. R. Shanmugam, 2023. "Impact of transfers on elementary education expenditure and measuring equalisation transfers to Indian States," Indian Economic Review, Springer, vol. 58(1), pages 141-168, June.

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