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Ecological Fiscal Transfers and State-level Budgetary Spending in India: Analysing The Flypaper Effects

Kaur, Amandeep and Mohanty, Ranjan and Chakraborty, Lekha S and Rangan, Divy (2021): Ecological Fiscal Transfers and State-level Budgetary Spending in India: Analysing The Flypaper Effects.

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Abstract

This paper examines the empirical evidence of flypaper effects in the ecological fiscal spending in India. Using the panel data models, we analyse whether the intergovernmental fiscal transfers, or the states’ own income determine the expenditure commitments on ecology at the State level. The econometric results show that the intergovernmental fiscal transfers rather than the states’ own income determines ecological expenditure at subnational levels in India. The results hold, when the models are controlled for ecological outcomes and demographic variables.

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