Centre-State financial Relations
I.S. Gulati and K.K. George, Essays in Federal Financial Relations (Centre for Development Studies Monograph Series), Oxford and IBH Pub. Co., pp. xiii + 172, Rs. 82.
This book under review is a collection of essays written by Professors I.S. Gulati and K.K. George, individually or jointly, and published in Economic and Political Weekly over the last one decade. The first essay, by far the most comprehensive in this volume, is a historical and empirical analysis of the resource flows from the Centre to the states during 1951-52 to 1984-85, i.e., the period covering the first six five-year plans, and was originally written as their Memorandum to the Sarkaria Commission. The next three essays critically examine the awards of the sixth, seventh and eighth Finance Commissions. The fifth essay deals with the state-wise break-up of the three major categories of inter-state financial redistributions, viz., statutory transfers, plan transfers and discretionary transfers. The transfers effected through commercial banks, insurance companies and long-term financial institutions are explored in the sixth essay, and the last essay narrates the manner in which the Centre has built inroads into the state subjects during the post-independence period.
It is well known that the federal fiscal relations in India are constitutionally guaranteed. The authors argue that this constitutional guarantee has a colonial past and that it owes its origin to the Government of India Act, 1935 which, according to the authors, was enacted to 'strengthen the domination of the Centre in its relations with the provincial governments under colonial rule'. Those who are aware of the constitutional history of India would agree that the extreme centralization of the federal revenue and the total dependence of the provinces on the Centre for annual allotment of funds to discharge the day-to-day administrative functions started with the emergence of the East India Company. Subsequently, even though the Montagu-Chelmsford reforms of 1919 recognized the necessity to earmark resources for the Centre and the provinces separately and had framed certain 'devolution rules', it was the Government of India Act,