Purpose

Despite existence of a constitutional demarcation of functions and finances between the centre and the states, it is alleged that the centre-state funds transfer systems in India have a political bargaining aspect that goes beyond the normative considerations. This paper makes an attempt to investigate if the political system allows to evolve a simple, equitable, objective and rule-based system of transfers. The aim of this paper is to explore the political economic determinants of discretionary fiscal transfers in India.

Design/methodology/approach

This paper is based on a panel data set of 28 Indian states for the period 2001–2014. After diagnostic checking for fixed effects/random effects, the authors prefer to use fixed effects regression with Driscoll–Kraay standard errors and Arellano–Bover/Blundel and Bond system estimation model that uses moment conditions in which lagged first differences of the dependent variable are instruments for the level equation.

Findings

The findings of this study reveal that fiscal performance, economic capacity and political alliance are significant but some other political determinants such as bargaining power and election years are not significant in influencing discretionary transfers.

Originality/value

Considering the limited availability of literature on federal finance, the present paper is an addition to the existing research, especially on a crucial issue concerning extra-constitutional fiscal transfers in India. Analysing a balanced panel comprising all the Indian states and examining the role of various political-economic determinants makes this paper topical.

中文翻译：

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印度联邦财政中的全权委托转移：面板数据分析

目的

尽管中央与州之间在宪法上对职能和财政进行了划界，但据称印度的中央与州之间的资金转移系统在政治上要讨价还价，这超出了规范性的考虑范围。本文试图研究政治制度是否允许发展一种简单，公平，客观和基于规则的转移支付制度。本文的目的是探讨印度可自由支配财政转移的政治经济决定因素。

设计/方法/方法

本文基于2001-2014年印度28个州的面板数据集。在对固定效应/随机效应进行诊断检查之后，作者更喜欢将固定效应回归与Driscoll–Kraay标准误差以及Arellano–Bover / Blundel和Bond系统估计模型一起使用，该模型使用矩条件作为变量，其中因变量的滞后初值是工具对于水平方程式。

发现

这项研究的结果表明，财政绩效，经济能力和政治联盟很重要，但其他一些政治决定因素（如议价能力和选举年）对影响自由裁量权的转移并不重要。

创意/价值

考虑到有关联邦财政的文献有限，本论文是对现有研究的补充，特别是在有关印度宪法外财政转移的关键问题上。分析由所有印度州组成的平衡小组，并研究各种政治经济决定因素的作用，使本文成为主题。