Centre-State Fiscal Imbalances

Centre-State fiscal imbalances in India refer to the mismatch between revenue-raising powers and expenditure responsibilities of the Union and State governments. This typically results in States having more expenditure obligations than their own revenue sources can cover, leading to dependence on Central transfers. These imbalances can be vertical (between Centre and States) or horizontal (among States).

Recent Developments

  • For FY 2024-25, the Union government is estimated to transfer Rs. 23,48,980 crore to states and UTs, an 11.9% increase from FY 2023-24 actuals.
  • This includes Rs. 12,47,211 crore from the divisible pool of central taxes and Rs. 11,01,769 crore in grants. ....
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Indian Economy