1Doctoral Teacher Fellow, Institute for Social and Economic Change, Bangalore
2Faculty, Dept. of Economics, GFGC, K R Puram, Bengaluru, Email: darshini.darshinijs@gmail.com
3Professor, Centre for Economic Studies and Policy (CESP), Institute for Social and Economic Change (ISEC), Bengaluru, Email: gayithri@isec.ac.in, respectively.
Online Published on 21 October, 2022.
This paper tries to empirically examine the factors which influence the allocation of discretionary central transfers to the 14 major Indian states covering a period of14 years, from 2003–04 to 2016–17. The panel robust fixed effects and fixed effect with Driscoll and Kraay standard error estimation models are employed. Research evidence bears out simultaneous impact of economic and political variables and interaction variables on discretionary transfers. As per the overall empirical outcome, fiscal space, GSDP growth, MPs, minority coalition are the major determinants of transfers. It is evident from the results that the states with a larger GSDP and fiscal space, along with political lobby, were able to get relatively larger central discretionary funds amid lesser influence and even lack of institutionalisation of political lobbying in Indian federalism.
Fiscal federalism, Federal transfers, Political lobby, Coalition Government
