Incentivizing fiscal transfers in the Indian federation

Publius: The Journal of Federalism

Volumn 33, Issue 4, 2003, Pages 43-62

  Rao, M Govinda ^a,b,c  

^a NATIONAL INSTITUTE OF PUBLIC FINANCE AND POLICY   (India)

^b INSTITUTE FOR SOCIAL AND ECONOMIC CHANGE   (India)

^c AUSTRALIAN NATIONAL UNIVERSITY   (Australia)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 5644295854     PISSN: 00485950     EISSN: None     Source Type: Journal    
DOI: 10.1093/oxfordjournals.pubjof.a005012     Document Type: Review

References (26)

1. M. Govinda Rao, "Dynamics of Indian Federalism," Center for Research in Economic Development and Policy Reform (CREDPR), Stanford University, Working Paper Number 150, 2002.
2. For an incisive analysis of issues of federalism in a globalizing environment, see Nirvikar Singh and T. N. Srinivasan, "Indian Federalism, Economic Reform and Globalization" (paper presented in the seminar on "Federalism in a Global Environment," Center for Research in Economic Development and Policy Research (CREDPR), Stanford University, 6-7 June 2002).
3. Richard M. Bird and Michael Smart, "Intergovernmental Fiscal Transfers: International Lessons for Developing Countries," World Development 30 (June 2002): 899-912.
4. M. Govinda Rao and Raja J. Chelliah, Survey of Research in Indian Fiscal Federalism (New Delhi: Indian Council of Social Science Research, 1996).
5. M. Govinda Rao and Nirvikar Shigh (1999), "How to Think about Local Government Reform in India" (paper presented at the conference on "Second-Generation Indian Economic Reforms," Madras School of Economics, Chennai, 8-10 December 1999; and M. Govinda Rao and Nirvikar Singh, "The Political Economy of Centre-State Fiscal Transfers in India" (paper presented at the Columbia University-World Bank Conference on "Institutional Elements of Tax Design and Reform," 18-19 February 2001).
6. M. Govinda Rao and Nirvikar Shigh (1999), "How to Think about Local Government Reform in India" (paper presented at the conference on "Second-Generation Indian Economic Reforms," Madras School of Economics, Chennai, 8-10 December 1999; and M. Govinda Rao and Nirvikar Singh, "The Political Economy of Centre-State Fiscal Transfers in India" (paper presented at the Columbia University-World Bank Conference on "Institutional Elements of Tax Design and Reform," 18-19 February 2001).
7. The terms "union" and "Center" are used interchangeably in this paper.
8. Rao and Singh, "How to Think about Local Government Reform in India."
9. M. Govinda Rao, Richard T. Shand and K. P. Kalirajan, "Convergence of Incomes across Indian States: A Divergent View," Economic and Political Weekly 34, 27 March-2 April 1999, pp. 769-778.
10. Some experts believe that Article 282, under which plan grants are made, is in the nature of a miscellaneous provision. However, K. K. Venugopal is clearly of the view that this violates Constitutional provisions; see National Institute of Public Finance and Policy (NIPFP), "The Ninth Finance Commission: Issues and Recommendations" (New Delhi: NIPFP, 1993.)
11. In respect of these commodities, the states had voluntarily surrendered their right to levy sales taxes and the Center has been levying additional excise duties, which were passed on to them on the basis of origin as per Finance Commissions' recommendations.
12. The National Development Council (NDC) is constituted by the cabinet ministers at the Center, chief ministers of the states, and the members of the Planning Commission, and is chaired by the prime minister.
13. Bird and Smart, "Intergovernmental Fiscal Transfers."
14. For a detailed analysis of state finances in recent years, see M. Govinda Rao, "State Finances in India," Economic and Political Weekly 37, 3-9 August 2002, pp. 3261-3271.
15. Roy Bahl, "Implementation Rules for Fiscal Decentralization," Development, Poverty and Fiscal Policy, M. Govinda Rao, ed. (New Delhi: Oxford University Press, 2002), pp. 253-277.
16. Ashok K. Lahiri, "Sub-National Public Finance in India," Economic and Political Weekly 35, 29 April 2000, pp. 1539-1549; Mukesh Anand, Amaresh Bagchi, and Tapas Sen, "Fiscal Discipline at the State Level: Perverse Incentives and Paths to Reform," National Institute of Public Finance and Policy Working Paper No. 1 (2002).
17. Ashok K. Lahiri, "Sub-National Public Finance in India," Economic and Political Weekly 35, 29 April 2000, pp. 1539-1549; Mukesh Anand, Amaresh Bagchi, and Tapas Sen, "Fiscal Discipline at the State Level: Perverse Incentives and Paths to Reform," National Institute of Public Finance and Policy Working Paper No. 1 (2002).
18. Rao, "State Finances in India."
19. Many of these have been brought out in various fiscal studies on individual states conducted by the National Institute of Public Finance and Policy (NIPFP), New Delhi.
20. M. Govinda Rao and Nirvikar Singh, "Federalism in India: Political Economy and Reform" (paper presented at a conference on "India: Ten Years of Economic Reform," William Davidson Institute, University of Michigan, September 2001).
21. The severest criticism was by the chief minister of Andhra Pradesh, whose party is a pivotal coalition partner at the Center.
22. Government of India, Ministry of Finance, The States' Fiscal Reform Facility, 2000-01 to 2004-05 (n.d.).
23. Government of India, Ministry of Finance, Report of lhe Finance Commission, 2000, pp. 9-13.
24. In considering transfers, only tax devolution and grants are taken account of. In much of the Indian literature, even loans are considered as transfers, which s conceptually incorrect.
25. Rao, "Dynamics of Indian Federalism."
26. Bird and Smart, "Intergovernmental Fiscal Transfers."