ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846
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Malady of Continuing Fiscal Imbalance

The root causes of the endemic fiscal crisis, especially in the states, are to be found in the simultaneous pursuit of fiscal objectives and policies which are in themselves incompatible. Carry-overs from the central planning era, these policies proceed on the basis that finances can be managed without reference to incentives, financial capacity of sub-national governments or fiscal discipline. Fiscal responsibility cannot be planned from above; rather rules and conditions must be created so that it will have to be practised by states. Subject to this condition, state autonomy should not be affected by the system of central transfers.

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