Phase IFoundation
Background
Overview
This concept is fundamental to understanding the functioning of Indian federalism, the distribution of financial powers, the mechanisms for resource sharing, and the challenges states face in securing adequate funds for development and public services.
Inter-governmental fiscal relations in India define the financial interactions and resource transfers between the Union government and state governments, as well as between state governments and local bodies. These relations are governed by constitutional provisions, recommendations of the Finance Commission, and various central schemes, aiming to address vertical and horizontal fiscal imbalances.