A set of events over the last few years have changed the balance of power between the central government and state governments.
These developments, when taken together, suggest that ‘Fiscal Federalism’ is at a crossroad in India, argues a recently released book called ‘Indian Fiscal Federalism’, authored by former Reserve Bank of India Governor YV Reddy and co-author GR Reddy.
These events include:
- The setting up of the GST Council
- The 14th Finance Commission and subsequently the terms of reference of the 15th Finance Commission
- Replacement of the Planning Commission with the NITI Aayog
- Reduced flexibility for states in revenue generation along with an increased burden of expenditure.
- The review of the Fiscal Responsibility And Budget Management Act undertaken by a committee headed by NK Singh.
These events taken together give the impression that an attempt is being made to shift the balance between center and states, YV Reddy said.
BloombergQuint spoke to the authors on some of these issues. Watch here: