11. Cooperative Federalism in Indi: The Rise and Resilience of Fiscal Transfers Amidst Party System Change
- Author:
- Suyash Rai and Milan Vaishnav
- Publication Date:
- 02-2023
- Content Type:
- Working Paper
- Institution:
- Centre for Policy Research, India
- Abstract:
- Has political centralization induced fiscal centralization in India? This paper examines this question through an institutional analysis of India’s Finance Commission, a constitutional body tasked with determining fiscal transfers from the Union government to the States, and through an analysis of Union government incentives to make discretionary transfers under various schemes. It finds no simple correspondence between political centralization and fiscal devolution. In recent years, despite the presence of a dominant party and considerable centralization of power, fiscal transfers from the Centre to the States have not undergone the sharp reversal that many expected. We argue that a nuanced understanding of the Finance Commission’s unique position is central to understanding India’s institutional landscape more generally. We also argue that understanding the interplay between political contestations and the pursuit of efficiency in the fiscal relations between the Union government and the sub-national governments can help shed new light on how centre-state relations are evolving.
- Topic:
- Resilience, Cooperative Federalism, and Fiscal Transfers
- Political Geography:
- South Asia and India