March 25, 2021

Why fiscal federalism in India appears to be a zero-sum game

In this piece for the Mint, Niranjan Rajadhyaksha examines the importance of a buoyant tax system to ease the battle for resources and help minimize Centre-state mistrust. 




"The country’s inability to increase its share of taxes as a proportion of GDP over the past three decades means that Indian fiscal federalism has been reduced to a zero-sum game. One player gains only at the expense of another when it comes to sharing the pie. The 15th Finance Commission has thus recommended a slew of fiscal reforms to increase the tax-to-GDP ratio, especially through an overhaul of the goods and services tax.


Only a buoyant tax system can ease the battle for resources in our federal system, and hopefully minimize the mistrust that has grown in recent years between the Centre and states."


Read the complete piece here

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