Vertical and horizontal fiscal imbalances exist in the Indian Union. Successive Finance Commissions have been playing an important role in reducing these fiscal imbalances by transferring fiscal resources to States. As States differ in their endowments as well as in efforts, a suitable criteria need to be evolved by the Finance Commissions striking a balance between equity and efficiency. As there is and there can be no final solutions, a continuous effort is needed to evolve principles for Inter se distribution. Twelfth Finance Commission, the latest Central Finance Commission, has made several important recommendations having an important bearing on the finances of the States as well as on the Centre. This in turn does influence the Centre-State financial relations in India. Therefore, the present volume makes an attempt to critically analyze important issues and recommendations relating to the percentage share and criteria of shared tax revenue, the quantum, category and the principles of grants-in-aid, debt relief, financing of calamity relief of States, upgradation grants etc. Impact of the recommendations on States’ finances especially, that of Andhra Pradesh and Orissa has been focused. This edited volume will be of interest and useful to students, scholars, academics and administrators working in the area of Public Finance and Public Administration in general and Center-State Financial relations in India in particular.
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