Decentralisation challenge in India

Decentralisation is not always a panacea, especially in countries, where the physical and human infrastructure is weak

India is a highly decentralised country, but it is still not meeting all its objectives. Some fiscal transfers from the Centre to states have achieved horizontal equity across states, while others are tilted towards the richer states. Fiscal decentralisation is not a panacea for everything. Some programmes need to be administered by the Centre to scale up investments and mobilise additional resources. Decentralisation agenda needs to be better aligned with the urbanisation agenda and scale up infrastructure investments.

There are several channels for fiscal decentralisation. One option is for the private sector to play an active role to maximise finance