Political determinants of centre-state transfers: An empirical analysis across Indian states
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 inv...
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Elsevier
2024-01-01
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| Series: | Journal of Government and Economics |
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| Online Access: | http://www.sciencedirect.com/science/article/pii/S266731932400034X |
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| author | Deepti Kohli |
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| author_sort | Deepti Kohli |
| collection | DOAJ |
| description | 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. |
| format | Article |
| id | doaj-art-2cf6b74dde38430281795e55c869a900 |
| institution | Kabale University |
| issn | 2667-3193 |
| language | English |
| publishDate | 2024-01-01 |
| publisher | Elsevier |
| record_format | Article |
| series | Journal of Government and Economics |
| spelling | doaj-art-2cf6b74dde38430281795e55c869a9002025-01-20T04:18:02ZengElsevierJournal of Government and Economics2667-31932024-01-0116100130Political determinants of centre-state transfers: An empirical analysis across Indian statesDeepti Kohli0Faculty of Management Studies, University of Delhi, New Delhi, IndiaThis 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.http://www.sciencedirect.com/science/article/pii/S266731932400034XLoansGrantsTax devolutionPolitical contributionsIntergovernmental transfersLegislative assembly elections |
| spellingShingle | Deepti Kohli Political determinants of centre-state transfers: An empirical analysis across Indian states Journal of Government and Economics Loans Grants Tax devolution Political contributions Intergovernmental transfers Legislative assembly elections |
| title | Political determinants of centre-state transfers: An empirical analysis across Indian states |
| title_full | Political determinants of centre-state transfers: An empirical analysis across Indian states |
| title_fullStr | Political determinants of centre-state transfers: An empirical analysis across Indian states |
| title_full_unstemmed | Political determinants of centre-state transfers: An empirical analysis across Indian states |
| title_short | Political determinants of centre-state transfers: An empirical analysis across Indian states |
| title_sort | political determinants of centre state transfers an empirical analysis across indian states |
| topic | Loans Grants Tax devolution Political contributions Intergovernmental transfers Legislative assembly elections |
| url | http://www.sciencedirect.com/science/article/pii/S266731932400034X |
| work_keys_str_mv | AT deeptikohli politicaldeterminantsofcentrestatetransfersanempiricalanalysisacrossindianstates |