Centre-State Financial Relations: Indian Context

In India, Centre-State financial relations relate to the distribution of power in resource mobilisation between the Centre and States as also the sharing of expenditure responsibilities. Most of the important and buoyant revenue sources are assigned to the Union Government, while major expenditure responsibilities in the social and economic sectors are assigned to State governments. In fact, the architects of the Indian Constitution drew on the experience of some extant federations where the assignment of taxes with a wide economic base to units had led to intractable problems of conflicting tax jurisdictions.

• The possibility of such conflicts was avoided by assigning ....