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STRENGTHENING DECENTRALIZATION - Augmenting the Consolidated Fund of the states by th Thirteenth Finacnce Commission: A NORMATIVE APPROACH

Author

Listed:
  • Abhay Pethe

    (Department of Economics, Univeristy of Mumbai)

  • B.M.Misra

    (Department of Economics, Univeristy of Mumbai)

  • Rakhe.P.B

    (Department of Economics, Univeristy of Mumbai)

Abstract

One of the terms of reference of the Thirteenth Finance Commission (ThFC) calls upon the Finance Commission to look at ‘Measures needed to augment the consolidated fund of a State to supplement the resources of the Panchayats and Municipalities in the State on the basis of the recommendations made by the Finance Commission of the State’. In view of this, the present study examines issues related to fiscal federalism at the third tier in general and grants to local bodies in particular. It is well documented in the literature that the state of finances of local bodies, both urban and rural, displays a dismal picture in India. In contrast, the finances of the Central and State Governments are on a healthier track with the implementation of the rule based fiscal framework. The study opines that there is a need to fine tune the micro design of grants for local bodies (both urban and local) and their devolution across the States.

Suggested Citation

  • Abhay Pethe & B.M.Misra & Rakhe.P.B, 2008. "STRENGTHENING DECENTRALIZATION - Augmenting the Consolidated Fund of the states by th Thirteenth Finacnce Commission: A NORMATIVE APPROACH," Department of Economics, University of Mumbai, Mumbai Working Papers 31, Department of Economics, University of Mumbai, Mumbai.
    • Handle: RePEc:ind:mudewp:31
    as

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    References listed on IDEAS

    as
    1. Abhay Pethe & Mala Lalvani, 2003. "A Fair Plan Approach For Devolution Under The Twelfth Central Finance Commission: Some Suggestions," Department of Economics, University of Mumbai, Mumbai Working Papers 8, Department of Economics, University of Mumbai, Mumbai.
    2. Abhay Pethe & Mala Lalvani, 2008. "Finances Of Panchayati Raj Institutions: A Simple Story But A Messy Plot," Department of Economics, University of Mumbai, Mumbai Working Papers 28, Department of Economics, University of Mumbai, Mumbai.
    3. Ajit Karnik & Abhay Pethe & Dilip Karmarkar, 2002. "Developing A Quantitative Framework For Determining Devolution Of Funds From The State Government To Local Bodies," Department of Economics, University of Mumbai, Mumbai Working Papers 3, Department of Economics, University of Mumbai, Mumbai.
    4. M. Govinda Rao & Sen, Tapas Kumar & Jena, Pratap R., 2008. "Issues before the thirteenth finance commission," Working Papers 08/55, National Institute of Public Finance and Policy.
    5. Abhay Pethe & Mala Lalvani, 2005. "Towards Economic Empowerment Of ULBS In Maharashtra," Department of Economics, University of Mumbai, Mumbai Working Papers 15, Department of Economics, University of Mumbai, Mumbai.
    6. Indira Rajaraman, 2007. "The Political Economy of the Indian Fiscal Federation," India Policy Forum, Global Economy and Development Program, The Brookings Institution, vol. 4(1), pages 1-51.
    7. Charles M. Tiebout, 1961. "An Economic Theory of Fiscal Decentralization," NBER Chapters, in: Public Finances: Needs, Sources, and Utilization, pages 79-96, National Bureau of Economic Research, Inc.
    8. Jonathan A. Rodden & Gunnar S. Eskeland (ed.), 2003. "Fiscal Decentralization and the Challenge of Hard Budget Constraints," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262182297, April.
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