Fiscal Federalism
Fiscal federalism refers to the financial relations between different levels of government. It involves the distribution of tax revenues and expenditure responsibilities. This system aims to balance economic disparities across regions. In India, fiscal federalism is crucial for equitable development. It ensures that states receive adequate resources for public services. Effective fiscal federalism promotes stability and growth in a diverse nation.
The 16th Finance Commission’s (FC) recommendations on vertical devolution have reignited an old but unresolved debate in Indian federalism: are States being fairly compensated for their constitutional responsibilities,...
February 5, 2026
