Government and Business Case Study

Fiscal Federalism In China And India: A Need For New Stratagem For Better Accountability

OR

Abstract:
Although China's unitary fiscal system differed from India's federal structure, they share similar problems related to fiscal federalism, such as the presence of multilevel government, bureaucracy, corruption and erosion of capital. In both the countries, the problems like inefficiency and macro stability arose at a local level due to lack of adequate tax bases for the expenditure responsibilities that had been assigned by law or through politico-bureaucratic decisions of the states. The economists felt that greater local autonomy could contribute to the economic development of both China and India.

Pedagogical Objectives:

• To the fiscal system of India and China.
• To the characteristics of an efficient fiscal system.
• To the importance of economic decentralisation.
• To to analyse the fiscal federalism initiatives that would improve the accountability.

Keywords :  India, People's Republic of China, Fiscal federalism, Vertical imbalances, Horizontal imbalances, Autonomous prefectures, Provinces, Gross domestic product, Unitary government, Federal government, Taxes, Subnational governments, Fiscal revenues, Fiscal expenditures, Tax assignment system, Constitution, Gross budgetary support