Some Patterns in Center-State Fiscal Transfers in India: An Illustrative Analysis

UC Santa Cruz International Economics Working Paper No. 04-18; UC Santa Cruz Economics Working Paper No. 579

21 Pages Posted: 22 Nov 2004

See all articles by Nirvikar Singh

Nirvikar Singh

University of California, Santa Cruz

Garima Vasishtha

International Monetary Fund

Date Written: September 2004

Abstract

India's federal system is distinguished by tax and expenditure assignments that result in large vertical fiscal imbalances, and consequent transfers from the central government to the state governments. Several channels are used for these transfers: the Finance Commission, the Planning Commission, and central government ministries. We use panel data on center-state transfers to examine how the economic and political importance of the states influences the level and the composition of per capita transfers to the states, as well as differences in temporal patterns of Planning Commission and Finance Commission transfers. We find evidence that states with indications of greater bargaining power seem to receive larger per capita transfers, and that there is greater temporal variation in Planning Commission transfers.

Suggested Citation

Singh, Nirvikar and Vasishtha, Garima, Some Patterns in Center-State Fiscal Transfers in India: An Illustrative Analysis (September 2004). UC Santa Cruz International Economics Working Paper No. 04-18; UC Santa Cruz Economics Working Paper No. 579, Available at SSRN: https://ssrn.com/abstract=596612 or http://dx.doi.org/10.2139/ssrn.596612

Nirvikar Singh (Contact Author)

University of California, Santa Cruz ( email )

Department of Economics
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Garima Vasishtha

International Monetary Fund ( email )

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