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

Articles By Indira Rajaraman

Fiscal Transfers for Forest Cover

The costs of preserving forest cover are borne jurisdictionally, but the benefits accrue externally. To compensate for this, the national government has paid an annual forest grant to the states since 2005. We construct a model to show why it has not prevented a decline in cover in highly forested states over 2007–2019, while a rise is seen in states with low initial cover. The implications are explored.


Is the 14% Revenue Guarantee to States Justified?

When the goods and services tax was introduced in July 2017, states were given a revenue guarantee of 14% per annum on their GST revenue over the base year 2015–16. Using data on revenue from subsumed taxes for 24 states and two union territories during the years 2012–16 preceding the GST, it is investigated whether the 14% revenue guarantee was justified. Not many states had a growth rate of subsumed taxes higher than 14% pre-GST, with most of them falling in the 5%–12% growth rate band. It is estimated that the potential savings in the compensation payment due from 1 July 2017 to 31 March 2020—if the states were assured of compensation at their respective historically achieved tax buoyancy—would have ranged between ₹ 1.8 lakh crore and ₹ 2.12 lakh crore.

Unique and Precious

The writer, an economist, was on the faculty of the Indian Institute of Management Bangalore, followed by the National Institute of Public Finance and Policy in Delhi. She was a member of the Thirteenth Finance Commission, whose recommendations covered the fiscal years 2010-15 and has regularly published research papers and book reviews in this journal. Here, she writes about why she thinks the EPW is an "incredible institution."

Rural Housing Quality as an Indicator of Consumption Sustainability

An exogenously defined poverty line yields poverty headcounts between any two points in time that are a net outcome of the two-way traffic into and out of poverty. This paper argues that, for the rural Indian context, where housing is too lumpy and illiquid to be used for consumption smoothing, transitions in housing quality in cross-sectional data sets can provide revealed evidence of household perceptions of downside risk to their current consumption levels. Using the two most recent National Sample Survey housing surveys (the 58th round for 2002 and the 65th round for 2008-09), composite housing quality classifications are unbundled, and binary wall quality is selected from cross-quartile behaviour as the feature most responsive to rising household consumption levels. In both rounds, the incremental move to better quality declines beyond the consumption level at which half of all households are in better quality structures. The threshold consumption level at which this happens was lower in 2008-09 than in 2002 and reflects an improvement in housing conditions over the period. However, this effective saturation of the demand for the most basic element of better housing, much before actual saturation, provides a quantitative measure of the percentage of households even in the topmost quartile that fears downside consumption risk.

Decentralisation, Preference Diversity and Public Spending: Health and Education in India

Education and health are commonly devolved functions to sub-national governments, even in nations which have a unitary rather than a federal structure. This paper investigates, for the specific case of a federal country like India, whether differences between states in shares of public spending on health and education show convergence over time, and the impact of episodic horizontal partitioning of states on this process. Our analysis rejects the hypothesis that preferences for health across state level jurisdictions are becoming more uniform over time, but for education, there is evidence of convergence, albeit at a low rate.