Indian centre state financial relations: an institutional paradox Khan Javaid Iqbal Assistant Professor, Department of Economics, University of Kashmir, Hazratbal, Srinagar, India Online published on 7 February, 2013. Abstract With the Issue of Mayo Resolution on Dec 14, 1870 foundations for the contemporary Unparalleled Indian Fiscal federalism were laid. This was there after carried forward by a series of interim measures like the Govt of India Act 1919, Meston Settlement 1920, Indian Taxation Enquiry Committee 1924–25, Indian Statutory Commission 1930, Peel Committee I, 1931, Percy Committee 1932, Peel Committee II 1932, the White paper on Indian Constitutional Reforms 1931 and finally in the Govt of India Act 1935. The enactment of Constitution on 26 January 1950 and the federal arrangements provided therein more so in case of financial relations was a watershed in laying the foundations for the intended pattern of socio-economic development of the nation. However with the passage of time the complexities of the federal arrangements have had a value addition over the period of time, initiated with the setting up of the Planning commission. The complementarities between the two institutions are far less than the rivalries as they pursue the same goals of strengthening the centre – state financial relationship through well defined institutional mechanisms via two different channels the plan and the Non plan, giving rise to a huge set of strains and at times proving counterproductive. This paper is an attempt to address this institutional dichotomy, the problems associated with it and their fallout. It also attempts to bring to light certain other important short-comings of the existing setup of centre state financial relations, viz, the centralization of revenues/state functions/horizontal and vertical imbalances. The paper indeed comes up with certain inevitable corrective measures for a frictionless Centre-State relationship that can go a long way in the socio – economic stability of the Indian state. Top |