Some Clarifications

This is in reference to the letter “Perplexing Data” by Akhilesh Tilotia (EPW, 23 March 2019), commenting on our article “Challenges to Indian Fiscal Federalism” (EPW, 2 March 2019). We thank the author for the careful reading of the article, and for highlighting the aspects that needed clarification.

One of the issues highlighted in the letter is that the various components of transfers do not add up to 100. It needs to be noted that the figures in the columns are not mutually exclusive. For example, normal central assistance (NCA) is a component of the state plan. Similarly, revenue deficit grants are a part of the statutory grants provided by the Finance Commission. Hence, the total will not add up to 100. The purpose was to illustrate the changing shares of conditional and unconditional grants in the total transfers of grants from the union to the states.