Prof. Vibhuti Patel speaking at Federalism Seminar by CCD at Vadodara on 25-8-2012

Fiscal federalism and equitable developments have been major concern in the development discourse in post independence period of India. The constitution of India has provided an instrument of Finance Commission every five years to bridge the gap between the prosperous and poor states and union territories. Important functions of the Commission are earmarked as distribution of the proceeds from sharable taxes, provision of grants in aid to the States in need of assistance, measures to augment resources of the state government to supplement the resources of the Panchayats and Municipalities in the States, address any other matter referred to the Commission in the interest of sound finance. Since the adoption of Indian Constitution, as per the Finance Commission (Miscellaneous Provisions) Act, 1951, 13 Finance Commissions have submitted their reports. The Fourteenth Commission will recommend fiscal arrangements between the Central Government and states between 2015 and 2020.
Globalization unleashed market forces, liberalization of agriculture, privatization of natural resources to sub-serve the interest of corporate capitalism, land grab and construction bubble are posing major challenges to the socio-economic and political fabric of centre-state relations. It is in this backdrop that this paper examines current concerns in public economics- economic reforms in fiscal federal system of India- tax and cess, revenue and expenditure assignments; and structures and mechanism for transfer of funds from the Centre to the States.