Fiscal Devolution – Thinking Outside the Box

align="left">The Union budget for fiscal year 2005-2006 is due in just over two weeks.  This is the period during which a lot of pressure is usually brought to bear on the Finance Minister (FM) to increase budgetary allocations for this or that panacea to transform India and eliminate mass poverty.  With greater continuity and stability in the tax regime the usual excitement about tax rates and the guessing games have been missing in recent years.  Therefore, much of the debate is about allocations, expenditure and fiscal deficits.

Can We Improve Delivery?

India has a functioning democracy and several institutions and practices ensure checks and balances and a modicum of governance. And yet, every government feels handicapped in delivering on its promises.

Fiscal Devolution – Thinking Outside the Box

The Union budget for fiscal year 2005-2006 is due in just over two weeks.  This is the period during which a lot of pressure is usually brought to bear on the Finance Minister (FM) to increase budgetary allocations for this or that panacea to transform India and eliminate mass poverty.  With greater continuity and stability in the tax regime the usual excitement about tax rates and the guessing games have been missing in recent years.  Therefore, much of the debate is about allocations, expenditure and fiscal deficits.

Empowered Local Governments

A large-sized district in India is larger than about eighty (80) nation-states in the world in terms of population. Most of our larger states would be among the large nations of the world. Uttar Pradesh, Bihar, Maharashtra and West Bengal - each would be the largest nation in Europe if independent. Even a truncated Uttar Pradesh would be the world's sixth largest nation! Given these mind-boggling demographic realities, coupled with unmatched diversity, our centralized, somewhat imperial style of governance is archaic and ineffective.