Horizontal distribution of federal transfers: Unpacking the population criterion
By: Sahu, Pareswar
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Material type: 
BookPublisher: Economic & Political Weekly Description: 60(25), Jun 21, 2025: p.19-21.Subject(s): population, population criterion, censusSummary: Horizontal fiscal imbalance across the states in India persists due to differences in resource endowments, population composition, geographical and climatic conditions, tax effort, level of development and the policy paradox. Investigating the nature of the population criterion used by successive finance commissions, this article argues that the assignment of equal weightage to active and inactive populations in a state increases horizontal fiscal imbalance. The population composition criterion, which assigns significant weight to inactive population, with minor weight to active population, ensures due share to each state and may be a better choice for addressing imbalance. - Reproduced
https://www.epw.in/journal/2025/25/commentary/horizontal-distribution-federal-transfers.html
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Articles
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Indian Institute of Public Administration | Available | AR136425 |
Horizontal fiscal imbalance across the states in India persists due to differences in resource endowments, population composition, geographical and climatic conditions, tax effort, level of development and the policy paradox. Investigating the nature of the population criterion used by successive finance commissions, this article argues that the assignment of equal weightage to active and inactive populations in a state increases horizontal fiscal imbalance. The population composition criterion, which assigns significant weight to inactive population, with minor weight to active population, ensures due share to each state and may be a better choice for addressing imbalance. - Reproduced
https://www.epw.in/journal/2025/25/commentary/horizontal-distribution-federal-transfers.html
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