Federalism and Fiscal Transfers in India

India's Constitution provides for a federal framework encompassing the central, state, and local governments. The system of fiscal transfers has been guided by India's Finance Commissions to bring revenues closer to expenditures across different tiers of government. In India, fifteen Finance Commissions have submitted their recommendations so far; the Sixteenth Finance Commission, which has recently been set up, is presently deliberating on issues of fiscal transfers as per constitutional provisions. Federalism and Fiscal Transfers in India provides a critical overview of the theoretical foundations guiding fiscal transfers in India and the country's empirical realities. It extensively covers not only the vertical and horizontal dimensions of fiscal transfers in the past but also looks at the contemporary issues and tensions that prevail between central and state governments, emphasising the principle and role of the Equalization Approach for determining inter-state sharing of resources. The second edition provides an updated review of the recommendations of the three most recent Finance Commissions, namely, the Thirteenth, Fourteenth, and Fifteenth Commissions. It also comments on the salient issues facing the Sixteenth Finance Commission and the long-term reforms needed for an equitable, stable, and efficient system of fiscal transfers in India.

C. Rangarajan, Chairman, Madras School of Economics,D.K. Srivastava, Chief Policy Advisor, Ernst & Young India

C. Rangarajan is a leading Indian economist who has played a key role both as an academic and a policy maker. He was Governor of the Reserve Bank of India during 1992-97 at a time when India embarked on wide-ranging economic reforms and Chairman of the Twelfth Finance Commission between 2003-04. Subsequently, he was, until May 2014, Chairman of the Economic Advisory Council to the Prime Minister. Dr. Rangarajan has been President of the Indian Economic Association in 1988 and 2017 and President of the Indian Econometric Society in 1994. He was awarded the Padma Vibhushan, India's second-highest civilian honour, in 2002.

D. K. Srivastava is Chief Policy Advisor, Ernst & Young India; Member, Twelfth Finance Commission; and Former Director, Madras School of Economics. Formerly, he was Professor of Economics at Banaras Hindu University and Senior Fellow at the National Institute of Public Finance and Policy. He has also taught at the University of Allahabad, India; the University of St. Andrews, UK; and the University of the West Indies, Jamaica. Dr. Srivastava holds MA, MLitt, and PhD degrees in Economics. He was a National Merit Scholar in India; a Commonwealth Scholar in the UK; and a Stanley Smith Fellow at the University of St. Andrews, UK.

1. Fiscal Federalism: Basic Tenets2. Evolution of Fiscal Federalism in India3. Fiscal Federalism in Practice: Canada and India4. Fiscal Federalism in Practice: Australia and India5. Resolving Vertical and Horizontal Imbalances in India*6. Dynamics of Debt Accumulation in India: Impact of Primary Deficit, Growth, and Interest Rate8. Thirteenth, Fourteenth, and Fifteenth Finance Commissions9. Future of Fiscal Federalism in India