Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/340750 
Authors: 
Year of Publication: 
2024
Citation: 
[Journal:] Journal of Government and Economics (JGE) [ISSN:] 2667-3193 [Volume:] 16 [Article No.:] 100130 [Year:] 2024 [Pages:] 1-21
Publisher: 
Elsevier, Amsterdam
Abstract: 
This paper focuses on the political aspect of intergovernmental transfers in India. By using a balanced panel data-set comprising of data on 28 Indian states and Union Territories for the period 2003-2023 for both Legislative Assembly and Parliamentary elections at the state-level, the aim is to investigate whether there occurs a politically motivated distribution of financial resources by the central government to the states in India? The analysis has been done for three categories of centre-state transfers: loans, grants and tax devolution. The regression estimations include various political controls such as, electoral competition between political parties, voter participation rate, government's ideological leaning, centre-state partisan affiliation, government incumbency and a control for political lobbying. The findings of this study reveal a significant influence of various political forces on different categories of intergovernmental transfers in India. For instance, a greater political competition leads to a lowering of grants and a rise in tax devolution and loans provided by the central government in proportion to the state's GDP. A left-leaning government ideology is found to entail an increase in the proportion of grants from the centre in proportion to the state's GDP. In addition, a greater partisan affiliation between the central and state governments leads to an increase in the average proportion of grants and tax devolution provided to that state. Finally, an increase in the political contributions provided to the winning party in a state leads to a rise in the provision of loans and grants by the centre to that state, while tax devolution is dampened. All these results do provide some evidence in favour of electoral opportunism and lobbying at work in the distribution of financial resources across Indian states.
Subjects: 
Grants
Intergovernmental transfers
Legislative assembly elections
Loans
Parliamentary elections
Political contributions
Tax devolution
JEL: 
D72
D73
H77
P35
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.