Editorial Note WE ARE happy to announce that M J K Thavaraj will be joining us on the editorial board of Social Scientist from this issue onwards. He has been associated with Social Scientist from its very inception a decade ago ^nd has beep a source of great help and encouragement for the journal. It is most gratifying for us that through this formal association we can from now on draw even more heavily upon his time and energy. He also contributes the lead article of the current issue. In the last few issues of Social Scientist we have published a number of articles discussing the question of federalism, both theoretically as wallas in the specific Indian context. Thavaraj carries this dicussion forward in his article by focussing on the concentration of financial resources in the h^ndsof the Centre. The gradual erosion over time of the revenue sources of the States through unilateral Central enactments, the whittling down of the importance of the Finance Commissions which are set up under the Constitution, and their gradual supersession by Central Government bodies like the Planning Commission of the Ministry of Finance, the increasing role of Central discretion in deciding on the magnitude of total financial transfers to the States, all thes^ are developments which have reduced the States in India to a virtual "mendicant status", even though under the Constitution much of the development and welfare expenditure that directly and immediately affects the people falls within the purview of the States. And the mendicaqts have of late been getting less and less alms. Matters finally cacne to a head last year when, under IMF tutelage, the Central Government raised the administered prices of a whole range of b^sic commodities. If the same revenue had come to the Centre through excise duties, a part of it would have had to be given to the States. But since the revenue was raised by increasing the administered prices, it was non-sharabie with the States. While the States had to spend more in money terms on account of this "engineered inflation'*, they could not claim a paisa out of the enhanced revenue. There was a crisis in State finances which was reflected in a sudden increase in State overdrafts with the Reserve Bank of India. But again while the Centre can resort to any amount of deficit financing, the States cannot. Outstanding overdrafts would either have to be adjusted against Central Plan assistance, or be converted into term-loans repayable with interest. Both these measures obviously serve only to worsen the financial crisis of the States, and hence ultimately increase further the burden on the people through enforced cut-backs in relief programmes, welfare expenditures, social services and the like, all of which are paid for out of the State budgets. The