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Aggarwal, Pawan K.
- Revenue-Sharing with the Linear Distance Criterion
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Authors
Affiliations
1 Gokhale Institute of Politics and Economics, Pune 411004, IN
2 National Institute of Public Finance and Policy, New Delhi 110 067, IN
1 Gokhale Institute of Politics and Economics, Pune 411004, IN
2 National Institute of Public Finance and Policy, New Delhi 110 067, IN
Source
Artha Vijnana: Journal of The Gokhale Institute of Politics and Economics, Vol 39, No 4 (1997), Pagination: 397-420Abstract
The linear distance formula occupies a prominent position as an allocative criterion for revenue-sharing among State in India as well as internotionally. In India, the Tenth Finance Commission has preferred this criterion to other competing criteria and has given it a predominant weight. This poper analyses analytical properties of the alternative versions of the distance criterion. A generalised version of the distance formula has been developed and the alternative versions have been shown to be its special cases. Alternative criteria are compared in terms of their progressivity and equity. Some of the recent Finance Commissions in India have used an arbitrary adjustment in the distance criterion under political constraints. This politically constrained version does not satisfy the requirement of maintaining vertical equity consistently. An alternative, based on the general version, is proposed that Is progressive as well as satisfies equity. The distance criterion is also shown to be equivalent to a system of fiscal capacity equalisation grants under certain assumptions.
- A New Global Measure of Tax Progressivity
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Authors
Source
Artha Vijnana: Journal of The Gokhale Institute of Politics and Economics, Vol 34, No 3 (1992), Pagination: 264-282Abstract
The study proposes a new global measure of tax progressivity in terms of inequality indices of pre-tax income and tax defined on the basis of concept of equally distributed equivalent level of income. It is found invariant to tax scale. While the existing measures in this class are found more suitable as indicators of redistributive impact of the tax, the new measure seems more suitable as measure of tax prograssivity or graduation in the tax schedule. The new measure along with the average tax rate is found to help in understanding changes in redistributive impact of the tax. The study reveals the comparison of tax progressivity or redistribution impact over time or, across different tax schedules has to be associated with the measure of progressivity or the welfare function associated with the relevant inequality indices.- On the Role of Population in Criteria-Based Revenue Sharing in India
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The theoretical findings are illustrated with data on the Indian states. Under all the three allocative criteria considered here, use of dated population results in substantial losses/gains in revenue devolution for different states.
Authors
Affiliations
1 National Institute of Public Finance and Policy, New Delhi, IN
1 National Institute of Public Finance and Policy, New Delhi, IN
Source
Journal of Indian School of Political Economy, Vol 9, No 1 (1997), Pagination: 1-13Abstract
Population enters as a key determinant in revenue-sharing arrangements in federalfiscal systems. It is used as a proxy for fiscal needs of the states in absolute terms as well as in conjunction with otherfactors. This paper examines the role ofpopulation as a determinant of the overall progressivity of the transfer mechanism under revenue-allocative criteria typically used by the Finnnce Commissions and the Planning Commission in India. If considerable weights are assigned to population, the overall progressivity of the allocative mechanism would be considerably compromised. Further, even in the case of progressive criteria, the use of dated population data instead of current year population data may result in unintended distortions and penalise states not only for a more than average population growth rate but also for being poorer.The theoretical findings are illustrated with data on the Indian states. Under all the three allocative criteria considered here, use of dated population results in substantial losses/gains in revenue devolution for different states.