ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Discretionary Budgetary Transfers A Review

Discretionary Budgetary Transfers: A Review K K George This paper concerns itself with non-plan, non-statutory transfers from the Union government to State governments in India. It is sometimes argued that a system in which resources are concentrated with the Centre and where the Central government enjoys the maximum discretion in its allocation, despite its other drawbacks, is better suited for effecting redistribution from the richer to the poorer States, The author's review of discretionary transfers covering nearly three decades tends to disprove this argument MOST discussions on the subject of Centre- State financial transfers are content with the analysis of statutory transfers effected under the aegis of the Finance Commission and the Plan transfers effected by the Planning Commission. (The term Plan transfers is used here in a somewhat narrow sense, of transfers from the Centre to the States to help them finance the State plans). This paper concerns itself with non-plan, nonstatutory transfers, transfers that are largely in the discretion of the Centre. There are at least two major objections to these transfers. Firstly, they are very much like gifts of the Centre and therefore, the considerations which govern their dispensation can be much more political than economic or objective. Both statutory and at least a major part of plan transfers by contrast, are supposed to be governed by clearly stated criteria, whatever they be, as spelt out from time to time, departures from which are not easily defensible. Secondly equity considerations tend more readily to be overlooked or sidestepped with respect to these transfers, so that the distribution of these transfers works often to the disadvantage of the relatively poor States.

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