Fraternity, prosperity and polarisation

Economic stagnation is the advance payment for polarisation, which extracts a terrible price

One of the most heartening and fraternal features of intergovernmental fiscal relations in India to date has been the progressivity of the horizontal devolution of tax revenues between states.

Finance Commissions, appointed every five years, recommend both the vertical devolution —the share of taxes going to the Centre and to the states — and the horizontal devolution — the share that each state gets. The latter is decided by a formula. The largest weight in this formula is given to what is called the “income distance” parameter, which is essentially the inverse of the per capita income of a state. Thus,