FISCAL FEDERALISM AND LOCAL AUTONOMY: A COMPARATIVE STUDY OF INTERGOVERNMENTAL TRANSFERS IN INDIA AND BRAZIL ,

Povzetek

This research article takes on a comparative examination of fiscal federalism and intergovernmental transfers in two giant and most varied federal democracies in the world-Brazil and India. The general aim of the study is to understand the specific constitutional and institutional arrangements; the resource allocation processes and the political economy of center-state and center-local fiscal relations. Drawing on the classic theoretical contributions of Richard Musgrave and Wallace Oates, the article describes how each country's transfer system deals with the fundamental issues of vertical and horizontal fiscal imbalances.[1]

For India, the analysis is about the statutory, quasi-judicial function of the Finance Commission, the historical role of the now-defunct Planning Commission and the transformative (but contentious) introduction of the Goods and Services Tax (GST). For Brazil, we investigate its specific constitutional co-equality status of municipalities, the design of its compulsory revenue-sharing funds (FPE and FPM) and the enormous ramifications of its recent tax reform (PEC 45/2019). A key observation is the common problem of political-economy drivers of resource allocation, where discretionary transfers are used to pay for political conformity in both countries, but that is offset in the case of India's statutory transfer system. The paper concludes that despite some degree of fiscal decentralization achieved in both countries, the challenge of imbalances and centralizing tendencies (often disguised by the rhetoric of modernizing reforms) continues to haunt the ideal of true local autonomy. The article contains specific recommendations for institutional and policy reforms to make intergovernmental relations fairer, more transparent and more efficient.[2]