The price India is paying for the largesse doled out by Centre and states

Irrespective of which among the two is more extravagant, it is the country's GDP growth and its rating that take a beating

A counter-intuitive paper on centre-state finances argues putting more money into the hands of state governments could actually lower the rate of GDP growth for the economy. The authors, Professors N R Bhanumurthy, Sukanya Bose and Sakshi Satija of the National Institute of Public Finance and Policy (NIPFP) do an interesting number-crunching exercise to show “higher devolution share of the states appear to result in marginally lower overall growth. Conversely, lower devolution share to the States vis-a-vis the baseline causes economic growth to be higher by 0.4 per cent for the 14th FC period on an average and 0.3 per