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

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Criteria for Distribution of Central Transfers

Central Transfers A Krishna Rao M Sarojini IN his article on 'Federal Fiscal Relations in India: Issue of Horizontal Transfers' (EPW, July 12, 1997) J V M Sarma has proposed a model to determine the criteria and the weights to be assigned to them in the distribution of central transfers among the states, He has pointed out that the selection of the criteria by the Finance Commissions so far has been near-subjective and the assignment of weights arbitrary and given the reduction of horizontal fiscal inequity as an important aim of federal transfers his study "intends to develop a method of objectively identifying the criteria and deriving of weights for deciding the horizontal revenue shares within a fiscal behavioural framework" (p 1719), It is true that the criteria for distribution as well as the weights to be assigned to them should be determined on an objective basis. This aspect has not so far received the attention it deserves. The author has done well in attempting to develop a methodology for this purpose. However, there are a few defects in his model which need to be mentioned. Before that, a brief description of the model is in order.
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