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Dependence of States on Central Transfers: State-wise Analysis


  • Rao, C. Bhujanga

    (National Institute of Public Finance and Policy)

  • Srivastava, D.K.

    (Madras School of Economics)


This paper examines the dependence of states on central fiscal transfers. The pattern of dependence of states on central transfers is studied with respect to five groups of states, namely, high, middle and low income general category states and two groups of special category states categorized into high and low income states. We make a distinction between transfers that are in the form of an entitlement like states' share in central taxes or statutory grants vis-a-vis transfers that are discretionary and depend on centre's decisions. In terms of groups of states, the extent of dependence is relatively quite high for the special category states and the low income states. The extent of dependence was lowest during the period covered under the Tenth Finance Commission period. It has since increased, for all states considered together, by about 3.5 percentage points, from 37.4 percent to 40.9 percent of states' revenue receipts. This increase comes both from entitlement transfers and discretionary transfers to the extent of 2.1 and 1.3 percentage points, respectively.

Suggested Citation

  • Rao, C. Bhujanga & Srivastava, D.K., 2014. "Dependence of States on Central Transfers: State-wise Analysis," Working Papers 14/137, National Institute of Public Finance and Policy.
  • Handle: RePEc:npf:wpaper:14/137
    Note: Working Paper 137, 2014

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    Cited by:

    1. D. K. Srivastava & Ragini Trehan, 2018. "Managing Central Government Finances: Asymmetric Seasonality in Receipts and Expenditures," Global Business Review, International Management Institute, vol. 19(5), pages 1322-1344, October.
    2. Bibhuti Ranjan Mishra, 2019. "The Size of Fiscal Multipliers in India: A State Level Analysis Using Panel Vector Autoregression Model," Global Business Review, International Management Institute, vol. 20(6), pages 1393-1406, December.
    3. Kumar Sumit & Kaur Baljit, 2023. "Intergovernmental Fiscal Transfers and Tax Collection of Indian States: Estimation from Panel Data Models," Acta Universitatis Sapientiae, Economics and Business, Sciendo, vol. 11(1), pages 258-271, October.
    4. Asharani Samal, 2020. "An Empirical Analysis of Asymmetry and Threshold Effect of Intergovernmental Grants in India: A Panel Data Analysis," Global Business Review, International Management Institute, vol. 21(2), pages 458-472, April.

    More about this item


    Central transfers; Tax devolution;

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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