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Fiscal Federalism and Redistributive Politics in India
Published in iimidr.ac.in
2017
Abstract

Constitutional design of intergovernmental transfers in India envisaged horizontal fiscal equalization as the basis of centre-state fiscal relations. However, growth of discretionary central transfers and expenditures have created possibility for redistributive politics to influence interstate distribution of central fiscal resources. Recent literature highlights role of political forces in determining interstate allocation of discretionary central transfers. However, available literature in Indian context suffers from serious data gaps due to omission of central transfers & spending bypassing the state budgets. Present paper addresses this specific data gap by using panel dataset of interstate allocation of all central transfers & spending relevant for regional welfare. Analysis suggests that while discretionary central transfers are driven by concerns for income inequality and poverty alleviation, bargaining power of the states through representation in ruling coalition at central level also influence disbursement of central funds. The paper also finds some evidence on role of median voter theorem in influencing interstate distribution of central transfers.

About the journal
JournalWORKING PAPER
Publisheriimidr.ac.in
Open AccessNo
Concepts (4)
  •  related image
    Fiscal federalism
  •  related image
    Horizontal fiscal equity
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    Fiscal flows
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    Central transfers & spending