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id	eprints-19318
recordtype	eprints
institution	SOAS, University of London
collection	SOAS Research Online
language	English
language_search	English
topic	HA Statistics HJ Public Finance
description	This article examines the relationship between federal transfers and fiscal deficits in India. The current system of transfers has been criticized on the grounds that it distorts the incentives for states to promote fiscal discipline. We analyze the relationship between transfers, state domestic product, and fiscal deficit for a panel of states during the period 1990 to 2010. The article finds a positive long-run relationship and bidirectional causality between primary/gross fiscal deficits and non-plan transfers. Further, there is a negative long-run relationship and one-way causality from state domestic product to transfers. These results are confirmed by multivariate cointegration analysis, which finds a long-run relationship between fiscal transfers, state product per capita, and state primary deficit. The evidence in the article is consistent with the system of fiscal transfers being ‘‘gap filling.’’
format	Journal Article
author	Bhatt, Antra
author_facet	Bhatt, Antra Scaramozzino, Pasquale
authorStr	Bhatt, Antra
author_letter	Bhatt, Antra
author2	Scaramozzino, Pasquale
author2Str	Scaramozzino, Pasquale
title	Federal Transfers and Fiscal Discipline in India: An Empirical Evaluation
publisher	Sage
publishDate	2015
url	https://eprints.soas.ac.uk/19318/