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The Political Economy of India’s Fiscal Federal System and its Reform

Author

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  • Rao, M. Govinda
  • Singh, Nirvikar

Abstract

This article examines recent and potential reforms in India’s fiscal federal system. We summarize key federal institutions in India, including tax and expenditure assignments, and mechanisms for Center-state transfers. We discuss the institutional process by which reforms can and do take place, including the role of academics, political influences, and especially institutions such as the Finance Commission. In contrast to the past, recent commissions have played a greater role in articulating an agenda for fiscal federal reform, which then proceeds through political bargaining. This change has taken place in the context of, and been influenced by, broader economic reform in India.

Suggested Citation

  • Rao, M. Govinda & Singh, Nirvikar, 2006. "The Political Economy of India’s Fiscal Federal System and its Reform," MPRA Paper 1279, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:1279
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    File URL: https://mpra.ub.uni-muenchen.de/1279/1/MPRA_paper_1279.pdf
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    References listed on IDEAS

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    1. R. Nagaraj & A. Varoudakis & M.-A. Véganzonès, 2000. "Long-run growth trends and convergence across Indian States," Journal of International Development, John Wiley & Sons, Ltd., vol. 12(1), pages 45-70.
    2. repec:cup:apsrev:v:83:y:1989:i:04:p:1181-1206_08 is not listed on IDEAS
    3. Dixit, Avinash & Londregan, John, 1998. "Fiscal federalism and redistributive politics," Journal of Public Economics, Elsevier, vol. 68(2), pages 153-180, May.
    4. World Bank, 2004. "India : Fiscal Decentralization to Rural Governments," World Bank Other Operational Studies 14674, The World Bank.
    5. Weingast, Barry R. & Wittman, Donald, 2008. "The Oxford Handbook of Political Economy," OUP Catalogue, Oxford University Press, number 9780199548477.
    6. repec:npf:wpaper:20 is not listed on IDEAS
    7. Rao, M Govinda, 1979. "Ideological Factors, Political Stability, and Tax Revenue Determination-A Case Study of Four States in Indian Federation," Public Finance = Finances publiques, , vol. 34(1), pages 114-128.
    8. 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.
    9. Nirvikar Singh & T.N. Srinivasan, 2004. "Indian Federalism, Economic Reform and Globalization," Public Economics 0412007, EconWPA.
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    Cited by:

    1. repec:kap:copoec:v:29:y:2018:i:1:d:10.1007_s10602-017-9253-y is not listed on IDEAS
    2. United Cities and Local Governments, 2011. "Local Government Finance," Books, Edward Elgar Publishing, number 14696, April.
    3. Pinaki Chakraborty & Shatakshi Garg, 2018. "Fiscal pressure of migration & horizontal fiscal inequality: Evidence from Indian experience," WIDER Working Paper Series 004, World Institute for Development Economic Research (UNU-WIDER).
    4. Alessandrini, Michele & Buccellato, Tullio & Scaramozzino, Pasquale, 2008. "Whither the Indian Federation? Regional Disparities and Economic Reforms," MPRA Paper 23416, University Library of Munich, Germany.
    5. Singh, Nirvikar & Srinivasan, T.N., 2006. "Federalism and economic development in India: An assessment," MPRA Paper 12452, University Library of Munich, Germany, revised Aug 2008.
    6. Hernandez-Trillo, Fausto, 2016. "Poverty Alleviation in Federal Systems: The Case of México," World Development, Elsevier, vol. 87(C), pages 204-214.
    7. Nirvikar Singh, 2007. "The dynamics of reform of India’s federal system," CESifo Forum, Ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 8(1), pages 22-31, April.
    8. Singh, Nirvikar, 2007. "Fiscal Decentralization in China and India: Competitive, Cooperative or Market Preserving Federalism?," Santa Cruz Department of Economics, Working Paper Series qt76d8b4hm, Department of Economics, UC Santa Cruz.

    More about this item

    Keywords

    intergovernmental transfers; economic reform; federalism; regional inequalities;

    JEL classification:

    • H1 - Public Economics - - Structure and Scope of Government
    • P35 - Economic Systems - - Socialist Institutions and Their Transitions - - - Public Finance
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • P26 - Economic Systems - - Socialist Systems and Transition Economies - - - Political Economy

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