Challenges to Indian Fiscal Federalism


LeftWord Books, New Delhi, 2019

Language: English

176 pages

5.5" x 8.5"

Price INR 295.00

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'An engaging book that is at once informative, educative and inspiring.' – C.P. Chandrasekhar, Jayati Ghosh
INR 295.00
Out of stock

The principle of fiscal federalism enshrined in India's Constitution is under severe strain today.

This book is a key addition to understanding the challenges involved. The authors capture the implications of the abolition of the Planning Commission, the introduction of the controversial Goods and Services Tax regime, and formulation of Terms of Reference of the 15th Finance Commission. These include the increase in vertical fiscal inequity, distortion of fairness in inter-State distribution, and erosion of policy autonomy at the level of the States.

Kerala has seen a unique effort to advance the devolution process from the State level to the panchayats and municipalities. Besides taking the path-breaking decision to devolve 40 per cent of State plan funds to local government institutions, the Kerala experiment involved a mass campaign to build capacity of local government. Kerala's Finance Minister Thomas Isaac and his co-authors argue that protecting and enhancing devolution is essential for strengthening popular participation in development decision-making.

This book is being published at a time when some of the State finance ministers have been leading a campaign on the need for revisiting certain Terms of Reference of the 15th Finance Commission. This involvement in a movement to reverse the tendency to erode both the fiscal and policy autonomy of the State gives the book an edge and urgency that will place it at the centre of the debate on the attack on Indian federalism.

Dr T.M. Thomas Isaac, Finance Minister, Kerala and principal author of 'Challenges to Indian Fiscal Federalism', in conversation with Vijay Prashad, the chief editor of LeftWord Books, New Delhi on 7 January 2019.

T.M. Thomas Isaac

T.M. Thomas Isaac is Distinguished Honorary Fellow at the Gulati Institute of Finance and Taxation, Thiruvananthapuram, Kerala. He served as Minister of Finance of Kerala for two terms, from 2006 to 2011, and from 2016 to 2021. Previously, during his tenure as a member of the Kerala State Planning Board, he was in charge of the People’s Plan Campaign. He is the author of numerous books in Malayalam and English.

C.P. Chandrasekhar

C.P. Chandrasekhar is a professor at the Centre for Economic Studies and Planning, Jawaharlal Nehru University, New Delhi. He has published widely in academic journals, and is the co-author of several books, including The Market that Failed: Neo-Liberal Economic Reforms in India and Demonetisation Decoded: A Critique of India’s Currency Experiment. He is a regular columnist for Frontline and Business Line.

Jayati Ghosh

Jayati Ghosh is Professor of Economics at Jawaharlal Nehru University, New Delhi. She has authored and co-edited several books and more than 120 scholarly articles. She is Executive Secretary of International Development Economics Associates (IDEAS - and Trustee of Economic Research Foundation (

Lekha Chakraborty

Lekha Chakraborty is Associate Professor, National Institute of Public Finance and Policy, New Delhi, and Research Scholar, The Levy Economics Institute of Bard College, New York (NY), USA. She is the author of Fiscal Consolidation, Budget Deficit and Macroeconomic Activity: Monetary Fiscal Policy Linkages (New Delhi 2016).

R. Mohan

R. Mohan took voluntary retirement from his position as Commissioner of Income Tax (Appeals) in 2016. He is currently a Senior Consultant in Gulati Institute of Finance and Taxation (GIFT) and Visiting Fellow, Centre for Development Studies (CDS). He is a member of Kerala Public Expenditure Review Committee. He is the author of several research papers.


. . . provide[s] useful insights into the historical context of federalism and offer[s] an elaborate analysis of its emerging tendencies. Authors . . . are eminent policymakers and scholars, having both the insiders' perspectives, by virtue of being at the helm of the affairs manoeuvring the federal machine from vital positions, and the intellectuals' reserve to assess the problems from afar. . . . [The book] articulates effectively the perspectives of the states on many contentious issues.

Anita Rath, Economic & Political Weekly

Challenges to Indian Fiscal Federalism . . . makes a strong case that the Indian central government has been appropriating increasing shares of revenue and of the power of decisions, thus reducing the power to act of the sub-national governments. This book makes a valuable statistical case for the above view. It will be endorsed by many . . .

Vito Tanzi, Financial Express