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

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Indian Fiscal Federalism at the Crossroads

The abolition of the Planning Commission, the creation of the NITI Aayog, the constitutional amendment to introduce the goods and services tax, the establishment of the goods and services tax council, and the historically high tax devolution to the states based on the Fourteenth Finance Commission have changed the union–state fiscal relations fundamentally. The changing contours of union–state fiscal relations discussed in the context of the release of a recent book Indian Fiscal Federalism by Y V Reddy and G R Reddy are presented here.

Fiscal Federalism and Regional Inequality in India

In all federal structures, the composing units are not self-sufficient financially. But, in India, the economic dependence of states on the centre is rather high because of widespread disparities in their levels of economic development. The federal transfers to the states through the Finance Commission, Planning Commission and centrally-sponsored schemes are investigated. The role of the union government in equitable direct investment, subsidy, and private investment policy for unbiased regional development is also underlined . The data proves that although the Finance Commission’s transfers are progressive, the share of devolution for low-income states is gradually decreasing. Unfortunately, all other transfers and efforts by the centre are regressive to address the regional inequality issues.

The Next Stage of Planning in India

A close review of the Niti Aayog’s vision document vis-à-vis earlier plans and programme details offers valuable insights and suggestions on the real issues that India must face for inclusive growth.

Why Women’s Studies?

The dissolution of the Planning Commission and expiry of the Twelfth Plan has imperilled the futures of the centres for Women's Studies, and Study of Social Exclusion and Inclusive Policy across public universities in India. These centres were borne out of struggles for inclusion and continue to operate at the margins of the academic set-up. A critical appraisal of Women's Studies has been undertaken here to locate its relevance in contemporary times.

Evolving Centre–State Financial Relations

After the Fourteenth Finance Commission award, aggregate transfers as a percentage of gross domestic product has increased, while grants as a percentage of GDP has declined. The centre is resorting to cess and surcharges that are not shared with the states. This would mean denial of revenue to states, which goes against the spirit of the Constitution. Further, the states have a reduced untied fi scal space, with the union’s share in Centrally Sponsored Schemes in 2016–17 (BE) being reduced. Finally, in the absence of plan transfers, post 2017–18, the focus should be to develop a framework for non-fi nance commission grants to states which is predictable and certain.

Role and Functions of NITI Aayog

The architecture, engineering and management aspects of the new institution, NITI Aayog, will have to be crafted carefully, if it is to serve as an institution to impart dynamism to the developmental process in a harmonious manner. Its effectiveness will depend on how it charts out a course for itself. An important question is whether the Aayog will have influence when it does not have the power to give grants and does not have the powers to make plan allocations to different ministries and departments.

Political Economy of Indian Economic Policy

The Evolution of Economic Policy in India: Selected Essays by P N Dhar; Oxford University Press, New Delhi, 2003; pp 255.

Twelfth Finance Commission and Panchayat Finances

Some issues for the consideration of the Twelfth Finance Commission in regard to its task of making recommendations to augment the Consolidated Fund of the states in order to supplement the resources of panchayats and municipalities.

Obituary : M J Manohar Rao

A committed academic, M J Manohar Rao was the quintessential problem-solver, whether in life or in economics.

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