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The Political Economy of India’s Federal System and its Reform

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  • Rao, M. Govinda
  • Singh, Nirvikar

Abstract

This article examines the nature of India’s federal system, and recent and potential reforms in its structure and working. We summarize key federal institutions in India, focusing particularly on the mechanisms for Center-state transfers. These transfers are large, and are the major explicit method for dealing with inequalities across constituent units of the federation. We examine the evidence on how India’s political economy has affected the practical workings of the transfer mechanisms. This is followed by a consideration of actual and possible reforms in India’s federal institutions, including tax assignments and local government, and a discussion of how they might be implemented in a politically feasible manner.

Suggested Citation

  • Rao, M. Govinda & Singh, Nirvikar, 2004. "The Political Economy of India’s Federal System and its Reform," Santa Cruz Department of Economics, Working Paper Series qt8tt605xg, Department of Economics, UC Santa Cruz.
    • Handle: RePEc:cdl:ucscec:qt8tt605xg
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    Cited by:

    1. Andrés Rodríguez-Pose & Roberto Ezcurra, 2010. "Does decentralization matter for regional disparities? A cross-country analysis," Journal of Economic Geography, Oxford University Press, vol. 10(5), pages 619-644, September.
    2. Rongili Biswas & Sugata Marjit & Velayoudom Marimoutou, 2010. "Fiscal Federalism, State Lobbying And Discretionary Finance: Evidence From India," Economics and Politics, Wiley Blackwell, vol. 22(1), pages 68-91, March.
    3. Yao, Yang, 2014. "The Chinese Growth Miracle," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 2, chapter 7, pages 943-1031, Elsevier.
    4. Fraschini, Angela, 2006. "Fiscal federalism in big developing countries: China and India," POLIS Working Papers 60, Institute of Public Policy and Public Choice - POLIS.

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