Grants from Centre and States’ Fiscal Marksmanship

Authors

Abstract

Issue: Jan-Feb 2021

In this paper, we aim to establish the issues with fiscal marksmanship of states’ revenue budgets. We particularly focus on the grants received from the Union government. Within grants, we find state plan schemes and centrally sponsored schemes to be the most volatile. Our analysis looks at three key stakeholders in the budget-making process and their role in poor fiscal marksmanship. These are the Centre, the states and the Finance Commission. The actuals could miss budget estimates due to the Centre misprojecting its revenues or expenditures, the states misprojecting their revenues, or the Finance Commission making errors while recommending grants. Poor estimation methods, weak capacity in drawing up budgets and implementing projects, specific conditionalities imposed either by the Centre or the Finance Commission and exogenous and random shocks that cannot be controlled for — all affect marksmanship of the states’ revenue budgets.

Keywords:

Fiscal Marksmanship, Revenue Budgets, Finance Commission, Centrally Sponsored Schemes

Authors Bio

Sharmadha Srinivasan, IDFC Institute

Sharmadha Srinivasan is an Associate at IDFC Institute. Her research focuses on the link between infrastructure investment and job creation, healthcare as re-architecturing welfare, and regional divergence. Prior to joining the IDFC Institute, Sharmadha worked at the Belgian Consulate in Mumbai as an Economic Affairs and Diplomacy Assistant to the Consul General. 

Prakhar Misra, IDFC Institute

Prakhar Misra is Senior Associate at IDFC Institute and leads Data Governance Network, for which IDFC Institute is the Secretariat. He is also an Advisory Board Member of Commonwealth Drone Partnership. His research focuses on governance and state capacity with respect to technology in India. He has analysed Fiscal Capacity in India and has also worked on a report modelling the link between infrastructure investment and job creation (funded by the Ford foundation).

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Published

2021-01-08