ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

Articles By Atul Sarma

The Role of Finance Commissions in Intergovernmental Fiscal Management

Fiscal imbalances, both vertical and horizontal, are common to federations and India is no exception. The Indian Constitution provides for instruments—shared taxes and grants-in-aid—to address such imbalances and an institutional mechanism—the finance commissions with specified terms of reference—to negotiate such imbalances. The paper addresses how 14 different FCs have dealt with their constitutionally assigned roles and strengthened the fabric of fiscal federalism in India. It further examines how the role of FCs were enlarged with additional terms in the interest of sound finance. It discusses, as an illustration, how FCs have addressed one of the major fiscal concerns, restoring budgetary balance and maintaining macroeconomic stability in the economy.