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Federalism

How powers, money and responsibilities are shared between the Union, the states and local governments, and how that balance affects what Kerala can do for its people.

India’s Constitution divides power between the Union and the states, and since 1992 has given a constitutional place to panchayats and municipalities. How that division works in practice is one of the most consequential and least understood questions in Indian public life.

Why it matters

Kerala raises a large share of its own revenue but depends on transfers for much of the rest. The rules for those transfers, the design of the Goods and Services Tax, conditions attached to central schemes and limits on state borrowing all shape what the state government can do. Kerala is also known for decentralising real power and money to local governments, an experiment that offers lessons and unfinished business.

How we work

  • Finance Commission analysis. We study each Finance Commission’s terms of reference, the submissions made to it and the outcome for states.
  • GST monitoring. We follow revenue trends, compensation issues and decisions of the GST Council.
  • Scheme design. We look at how centrally sponsored schemes are funded and implemented at state and local levels.
  • Local democracy. We study the functioning of panchayats and municipalities, their finances and their planning.

We aim to be useful to all sides of a debate that is often conducted in partisan terms. Our analysis is evidence first, and we publish our data so others can test it.

Questions we are asking

  1. 01

    Do the formulas used to share central taxes treat states that controlled population growth fairly?

  2. 02

    How has the Goods and Services Tax changed the fiscal autonomy of states?

  3. 03

    When the Union funds a scheme and a state runs it, who is accountable for the results?

  4. 04

    How can the constitutional promise of strong local government be completed?

Publications

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Policy Brief
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Policy Brief

Bringing Off Budget Borrowing into the Light

Borrowing by state owned bodies has become a large and contested part of public finance. A simple annual disclosure statement would let legislators and citizens see the full picture without stopping investment.

Scholar One

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