Phase IFoundation
Background
Overview
Fundamental to the functioning of India's federal structure, impacting states' financial autonomy, development capacity, and the overall balance of power between Centre and States. It's a constant point of debate and reform, central to understanding India's governance and economic policy.
Fiscal federalism refers to the division of financial powers and responsibilities between different levels of government (Centre and States) in a federal system. Centre-State financial relations govern the mechanisms of revenue sharing, grants-in-aid, and borrowing powers, aiming to address vertical and horizontal fiscal imbalances and ensure equitable development.