IDEAS home Printed from https://ideas.repec.org/p/mad/wpaper/2022-222.html
   My bibliography  Save this paper

Intergovernmental fiscal relations in India: Time for the Next Generation of Reforms

Author

Listed:
  • D.K. Srivastava

    (Executive Council Member, Madras School of Economics, and Chief Policy Advisor, EY India and formerly Director, Madras School of Economics)

Abstract

The system of intergovernmental fiscal relations in India has steadily evolved over the last seven decades under the guidance provided by Finance Commissions. Various dimensions of the fiscal landscape in India have been subjected to periodic reforms. In spite of these, India’s tax-GDP ratio has effectively stagnated over the last thirty years. Recent GST reforms have also qualitatively and quantitatively affected the relative position of resources for the central and state governments. Debt and fiscal deficit stabilization which has been subjected to Fiscal Responsibility Legislations also requires a relook due to certain inbuilt inconsistencies which have been highlighted in the paper and in view of the current global challenges. This paper suggests that it is time for undertaking the next generation of reforms that would guide intergovernmental fiscal relations in India in the emerging future. The suggested reforms cover issues pertaining to uplifting India’s tax-GDP ratio, comprehensive GST reforms, mechanisms and formulae used in determining intergovernmental transfers, and Fiscal Responsibility Legislations.

Suggested Citation

  • D.K. Srivastava, 2022. "Intergovernmental fiscal relations in India: Time for the Next Generation of Reforms," Working Papers 2022-222, Madras School of Economics,Chennai,India.
    • Handle: RePEc:mad:wpaper:2022-222
    as

    Download full text from publisher

    File URL: https://www.mse.ac.in/wp-content/uploads/2022/08/Working-Paper-222.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. D. K. Srivastava, 2006. "Equalizing Health and Education: Approach of the Twelfth Finance Commission," Working Papers 2006-08, Madras School of Economics,Chennai,India.
    2. Rangarajan, C. & Srivastava, D. K., 2011. "Federalism and Fiscal Transfers in India," OUP Catalogue, Oxford University Press, number 9780198070986.
    3. D. K. Srivastava, 2006. "Equalizing Health and Education : Approach of the Twelfth Finance Commission," Finance Working Papers 22517, East Asian Bureau of Economic Research.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Chakraborty, Lekha S., 2007. "Gender responsive budgeting and fiscal decentralisation in India: A preliminary appraisal," Working Papers 07/46, National Institute of Public Finance and Policy.
    2. Darshini J S & K Gayithri, 2019. "Fiscal dependency of States in India," Working Papers 433, Institute for Social and Economic Change, Bangalore.
    3. Pinaki Chakraborty & Shatakshi Garg, 2018. "Fiscal pressure of migration & horizontal fiscal inequality: Evidence from Indian experience," WIDER Working Paper Series 004, World Institute for Development Economic Research (UNU-WIDER).
    4. Kumar B, Pradeep & R, Ramya, 2020. "Ownership Pattern of Public Debt in India: A Study," MPRA Paper 103738, University Library of Munich, Germany, revised 20 May 2020.
    5. Patnaik, Ila & Sengupta, Rajeswari, 2020. "Impact of Covid-19 on the Indian Economy: An Analysis of Fiscal Scenarios," Working Papers 20/319, National Institute of Public Finance and Policy.
    6. D.K. Srivastava, 2023. "Evolving Contours of Centre-State Fiscal Relations: Inconsistencies, Ad-Hocism and Centralization," Working Papers 2023-239, Madras School of Economics,Chennai,India.
    7. Pinaki Chakraborty & Shatakshi Garg, 2018. "Fiscal pressure of migration and horizontal fiscal inequality: Evidence from Indian experience," WIDER Working Paper Series wp-2018-4, World Institute for Development Economic Research (UNU-WIDER).
    8. Sthanu R. Nair, 2019. "India’s Agrarian Performance: A Comparative Analysis of UPA and NDA Regimes," Working papers 340, Indian Institute of Management Kozhikode.
    9. B Pradeep Kumar & R Ramya, 2020. "Ownership Pattern of Public Debt in India: A Study," Shanlax International Journal of Economics, Shanlax Journals, vol. 8(3), pages 16-24, June.
    10. Arun Jaitley, 2018. "Economic Survey 2017: Volume I, Chapter 4: Reconciling Fiscal Federalism and Accountability: Is there a Low Equilibrium Trap?," Working Papers id:12443, eSocialSciences.

    More about this item

    Keywords

    Intergovernmental relations; fiscal reforms; tax-GDP ratio; debt sustainability; GST reforms; finance commission;
    All these keywords.

    JEL classification:

    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mad:wpaper:2022-222. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Geetha G (email available below). General contact details of provider: https://edirc.repec.org/data/mseacin.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.