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State Finances in India: A Case for Systemic Reform

  • Singh, Nirvikar

This paper provides a self-contained overview of the present problems of state finances in India. It begins with an overview of historical evolution and current institutional structures, including economic, political, administrative and fiscal aspects of India’s federal system. The paper then reviews the current situation of India’s state government finances, going on to consider various developments that have shaped the states’ current fiscal situation, including the roles of national economic reform, the intergovernmental transfer system, tax reform, and local government reform. Policy options for reforming institutions of fiscal federalism system, borrowing mechanisms for the states, and governance are then discussed, with an emphasis on the principle that states should have appropriate incentives for fiscal discipline at the margins of revenue and expenditure.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 1281.

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Date of creation: Mar 2006
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Handle: RePEc:pra:mprapa:1281
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  1. Ricardo Hausmann & Catriona Purfield, 2004. "The Challenge of Fiscal Adjustment in a Democracy: The Case of India," IMF Working Papers 04/168, International Monetary Fund.
  2. Khemani, Stuti, 2002. "Federal politics and budget deficits: evidence from the states of India," Policy Research Working Paper Series 2915, The World Bank.
  3. Alan Richards & Nirvikar Singh, 2004. "Inter State Water Disputes in India: Institutions and Policies," Development and Comp Systems 0412010, EconWPA.
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