Equalization Transfers Policy Based on Expenditure Needs and Own Revenue Capacity of Indian State Governments

K. R. Shanmugam () and K. Shanmugam ()
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K. R. Shanmugam: Madras School of Economics
K. Shanmugam: Government of Tamil Nadu
Authors registered in the RePEc Author Service: Shanmugam K. Rangasamy

Chapter Chapter 7 in India’s Contemporary Macroeconomic Themes, 2023, pp 153-179 from Springer

Abstract: Abstract This study addresses an important policy issue pertaining to the determination of equalization transfers to Indian States. It measures the revenue expenditure needs and own revenue fiscal capacity of States normatively and determines the equalization transfers in four alternative scenarios. The estimated amounts of equalization transfers for all 29 States range from ₹ 3,73,956 crore to ₹ 14,77,282 crore. These findings will be useful to policymakers and other researchers to design more effectively the transfers policy besides general-purpose transfers to address the resource gap such that the Indian States can provide a standard level of public services.

Keywords: Equalization transfers; Expenditure gaps; Revenue capacity; Indian states; Panel methodology (search for similar items in EconPapers)
JEL-codes: C23 H72 H73 H77 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:spr:isbchp:978-981-99-5728-6_7

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DOI: 10.1007/978-981-99-5728-6_7

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