Federal Transfers and the Tax efforts of the States in India

K., Jothi Sivagnanam and M., Naganathan (1999): Federal Transfers and the Tax efforts of the States in India. Published in: Indian Economic Journal , Vol. volume 47, No. part 4 (2000): pp. 101-110.

Abstract

The paper has examined the the impact of federal fiscal transfers on the budget of the state (sub-central) governments in India. The relationship between the federal fiscal transfers and the tax efforts of the 14 major Indian states have been anlysed for fifteen years (from 1970-71 to 1984-85)through a panel dadat set. Fixed efeect model and its variants have been employed. The study found that the federal transfers have dampaned the tax efforts of states in India. Hence, a hiher weightaege for the 'tax effort criterion' has been suggested in the vertical devolution formula of the Indian Finance Commission to ensure efficiency.

• Item Type: MPRA Paper
• Institution: University of Madras
• Language: English
• Keywords: Federal Transfers; Tax Efforts; Fiscal Federalism in India; Efficiency; Vertical fiscal balance
• Subjects: H - Public Economics > H7 - State and Local Government; Intergovernmental Relations > H77 - Intergovernmental Relations; Federalism; Secession; H - Public Economics > H7 - State and Local Government; Intergovernmental Relations > H72 - State and Local Budget and Expenditures; H - Public Economics > H7 - State and Local Government; Intergovernmental Relations

References

Naganathan M. and K. Jothi Sivagnanam (2000): Federal Transfers and the Tax efforts of the States in India. Published in: Indian Economic Journal part 4.volume 47 (2000): pp. 101-110.