Central Fiscal Transfers and States’ Own-Revenue Efforts in India
Prasant Panda
Margin: The Journal of Applied Economic Research, 2009, vol. 3, issue 3, 223-242
Abstract:
Using the fixed and random effect panel regression models the paper tries to empirically examine the incentive effects of federal transfers on states’ own-revenue. Per capita resource transfers from the centre are found to be significant and negatively associated with states’ own-revenue, own-tax revenue and own-non-tax revenue in per capita terms, irrespective of choices of models or specification. This possibly indicates that central transfers have a dampening effect on states’ revenue efforts. Further, the incentive criterion for tax effort as used in the Finance Commission devolutions and in the Gadgil formula used by the Planning Commission is not reflected in the system, and it has failed to induce the desired, positive revenue pattern in states. The paper calls for assigning a higher weight to tax effort in the devolution formula and for more effective co-ordination among different channels in designing criteria and incentives.
Keywords: Federal Transfers; Revenue Effort; Panel Data Models; Incentive Effects; JEL Classification: H70; JEL Classification: H71; JEL Classification: C23 (search for similar items in EconPapers)
Date: 2009
References: Add references at CitEc
Citations: View citations in EconPapers (10)
Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/097380100900300302 (text/html)
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:sae:mareco:v:3:y:2009:i:3:p:223-242
DOI: 10.1177/097380100900300302
Access Statistics for this article
More articles in Margin: The Journal of Applied Economic Research from National Council of Applied Economic Research
Bibliographic data for series maintained by SAGE Publications (sagediscovery@sagepub.com).