This report is an outcome of the larger research project, “A Study of Intergovernmental Fiscal Transfers in India”, supported by a grant from the International Development Research Centre (IDRC), Canada, under the Think Tank Initiative.

 

In recent years, there has been a fundamental change in the Union-State fiscal relations brought about by a number of policy developments which have both immediate and long-term implications for the States and their finances. The report using state budgets of 2016-17 examines the likely impact of some of these policy changes on the finances of state governments. Given the fact that in large federal countries including India, the responsibility for social sector spending lies with the subnational governments, any change in the fiscal space of states will have implications for social sector financing. The report also examines the implications of these policy changes on expenditures of states, especially expenditures on social sector.