State Finances in India: A Case for Systemic Reform

Singh, Nirvikar (2006): State Finances in India: A Case for Systemic Reform. Forthcoming in:

Abstract

This paper provides a self-contained overview of the present problems of state finances in India. It begins with an overview of historical evolution and current institutional structures, including economic, political, administrative and fiscal aspects of India’s federal system. The paper then reviews the current situation of India’s state government finances, going on to consider various developments that have shaped the states’ current fiscal situation, including the roles of national economic reform, the intergovernmental transfer system, tax reform, and local government reform. Policy options for reforming institutions of fiscal federalism system, borrowing mechanisms for the states, and governance are then discussed, with an emphasis on the principle that states should have appropriate incentives for fiscal discipline at the margins of revenue and expenditure.

• Item Type: MPRA Paper
• Institution: University of California, Santa Cruz
• Language: English
• Keywords: fiscal policy; intergovernmental transfers; incentives; institutional reform
• Subjects: P - Economic Systems > P2 - Socialist Systems and Transitional Economies; H - Public Economics > H1 - Structure and Scope of Government; H - Public Economics > H7 - State and Local Government; Intergovernmental Relations