IDEAS home Printed from https://ideas.repec.org/p/npf/wpaper/04-20.html
   My bibliography  Save this paper

Fiscal transfer in Australia: Review and relevance to India

Author

Listed:
  • Rangarajan, C.

    (National Institute of Public Finance and Policy)

  • Srivastava, D.K.

    (National Institute of Public Finance and Policy)

Abstract

This paper examines the working of Australia's fiscal transfer system in the context of its long term evolution, paying particular attention to salient changes that have occurred since the introduction of a comprehensive Goods and Services Tax (GST). The GST has served to increase the vertical imbalance in the system, which was high even prior to this change, by placing more revenue resources with the commonwealth government in Australia. In spite of a high degree of expenditure centralisation, considerable emphasis is placed in Australia for achieving horizontal fiscal equalisation through an elaborate mechanism of equalisation transfers, which looks into both revenue and expenditure sides of the state budgets and calculates revenue and expenditure `disabilities' that account for departures from a pure equal per capita distribution of the shareable amounts. This paper looks at the equity and efficiency implications of the Australian equalisation transfers and considers its relevance for the Indian system, which has many comparable features. Apart from the need for making equalising features of the Indian transfer system more transparent, there is need for emphasising some cost disabilities, particularly those that are structural and exogenous in nature.

Suggested Citation

  • Rangarajan, C. & Srivastava, D.K., 2004. "Fiscal transfer in Australia: Review and relevance to India," Working Papers 04/20, National Institute of Public Finance and Policy.
    • Handle: RePEc:npf:wpaper:04/20
    Note: Working Paper 20, 2004
    as

    Download full text from publisher

    File URL: http://www.nipfp.org.in/working_paper/wp04_nipfp_020.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Gianluigi Galeotti & Albert Breton, 1986. "An Economic Theory of Political Parties," Kyklos, Wiley Blackwell, vol. 39(1), pages 47-65, February.
    2. 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.
    3. James M. Buchanan & Richard E. Wagner, 1970. "An Efficiency Basis for Federal Fiscal Equalization," NBER Chapters, in: The Analysis of Public Output, pages 139-162, National Bureau of Economic Research, Inc.
    4. 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.
    Full references (including those not matched with items on IDEAS)

    Citations

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


    Cited by:

    1. Shanmugam K. & Shanmugam K. Rangasamy, 2024. "Impact of fiscal transfers policy on regional growth convergence in India," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 29(1), pages 38-55, January.
    2. Sharma, Chanchal Kumar, 2021. "The political economy of India's transition to Goods and Services Tax," GIGA Working Papers 325, GIGA German Institute of Global and Area Studies.
    3. M. Govinda Rao & Nirvikar Singh, 2007. "The Political Economy of India's Fiscal Federal System and its Reform," Publius: The Journal of Federalism, CSF Associates Inc., vol. 37(1), pages 26-44, Winter.
    4. 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.
    5. Richa Saraf & D.K.Srivastava, 2009. "Determining General and Specific Purpose Transfers : An Integrated Approach," Microeconomics Working Papers 22943, East Asian Bureau of Economic Research.
    6. Capella-Ramos, João & Checherita-Westphal, Cristina & Leiner-Killinger, Nadine, 2020. "Fiscal transfers and economic convergence," Occasional Paper Series 252, European Central Bank.
    7. K. R. Shanmugam & K. Shanmugam, 2022. "Designing Transfers Policy with Normatively Determined Revenues and Expenditures of State Governments in India," Working Papers 2022-237, Madras School of Economics,Chennai,India.
    8. 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.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. 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.
    2. Richa Saraf & D.K.Srivastava, 2009. "Determining General and Specific Purpose Transfers : An Integrated Approach," Microeconomics Working Papers 22943, East Asian Bureau of Economic Research.
    3. Wallace E. Oates & Wallace E. Oates, 2004. "An Essay on Fiscal Federalism," Chapters, in: Environmental Policy and Fiscal Federalism, chapter 22, pages 384-414, Edward Elgar Publishing.
    4. D. K. Srivastava, 2006. "Equalizing Health and Education : Approach of the Twelfth Finance Commission," Finance Working Papers 22517, East Asian Bureau of Economic Research.
    5. Jonathan Pincus, 2011. "Examining Horizontal Fiscal Equalisation in Australia," School of Economics and Public Policy Working Papers 2011-25, University of Adelaide, School of Economics and Public Policy.
    6. Jorge Martinez-Vazquez & Cristian Sepulveda, 2012. "Toward a More General Theory of Revenue Assignments," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1231, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    7. Jorge Martinez-Vazquez & Cristian Sepulveda, 2020. "A Theoretical Rationale for the Fiscal-Gap Model of Equalization Transfers," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 76(1), pages 1-28.
    8. Albouy, David, 2012. "Evaluating the efficiency and equity of federal fiscal equalization," Journal of Public Economics, Elsevier, vol. 96(9-10), pages 824-839.
    9. Weingast, Barry R., 2009. "Second generation fiscal federalism: The implications of fiscal incentives," Journal of Urban Economics, Elsevier, vol. 65(3), pages 279-293, May.
    10. Wallace E. Oates, 2006. "On the Theory and Practice of Fiscal Decentralization," Working Papers 2006-05, University of Kentucky, Institute for Federalism and Intergovernmental Relations.
    11. Wallace E. Oates, 2006. "On the Theory and Practice of Fiscal Decentralization," Working Papers 2006-05, University of Kentucky, Institute for Federalism and Intergovernmental Relations.
    12. D. K. Srivastava, 2006. "Equalizing Health and Education: Approach of the Twelfth Finance Commission," Working Papers 2006-08, Madras School of Economics,Chennai,India.
    13. George Tridimas & Stanley L. Winer, 2018. "On the Definition and Nature of Fiscal Coercion," Carleton Economic Papers 18-09, Carleton University, Department of Economics.
    14. Emanuel Kohlscheen, 2008. "Debt Bailouts And Constitutions," Economic Inquiry, Western Economic Association International, vol. 46(3), pages 480-492, July.
    15. Suzuki, Takafumi, 2021. "Capitalization of local government grants on land values: Evidence from Tokyo metropolitan area, Japan," Japan and the World Economy, Elsevier, vol. 60(C).
    16. Boadway, Robin & Song, Zhen & Tremblay, Jean-François, 2013. "Non-cooperative pollution control in an inter-jurisdictional setting," Regional Science and Urban Economics, Elsevier, vol. 43(5), pages 783-796.
    17. Mitsui, Kiyoshi & Sato, Motohiro, 2001. "Ex ante free mobility, ex post immobility, and time consistency in a federal system," Journal of Public Economics, Elsevier, vol. 82(3), pages 445-460, December.
    18. Michael Smart, 2007. "Raising taxes through equalization," Canadian Journal of Economics, Canadian Economics Association, vol. 40(4), pages 1188-1212, November.
    19. Strain, J. Frank, 1993. "Integration, Federalism and Cohesion in the European Community: Lessons from Canada," Research Series, Economic and Social Research Institute (ESRI), number PRS16.
    20. Hindriks, Jean & Peralta, Susana & Weber, Shlomo, 2008. "Competing in taxes and investment under fiscal equalization," Journal of Public Economics, Elsevier, vol. 92(12), pages 2392-2402, December.

    More about this item

    Keywords

    Fiscal transfer ; Australia;

    Statistics

    Access and download statistics

    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:npf:wpaper:04/20. See general information about how to correct material in RePEc.

    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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: S.Siva Chidambaram The email address of this maintainer does not seem to be valid anymore. Please ask S.Siva Chidambaram to update the entry or send us the correct address (email available below). General contact details of provider: http://www.nipfp.org.in .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.