Reforming India’s Fiscal Transfer System : Resolving Vertical and Horizontal Imbalances

Two central problems in a fiscal transfer systemrelate to resolving vertical and horizontal imbalances. In the context of the setting of the 13th Finance Commission, this paper looks at the methodological background of fiscal transfers followed by recent Finance Commissions in India, particularly the Twelfth Finance Commission (TFC). It is noted that in India, there is long - term stability in the share of states after transfers in the combined revenues of the centre and the states. It is argued that this stability depends on linking the share of states in the transfers, particularly tax devolution with the difference in the buoyancies of central and states taxes. In the context of horizontal imbalance, it is argued that some of the recent Finance Commissions have implicitly followed an axiomatic approach to tax devolution and brought in some normative elements in determining grants. In spite of large difference in fiscal capacities, a high degree of equalization has been achieved. It is shown, for example, that in the case of TFC recommended transfers, nearly 88 percent of needed equalization was achieved while devoting 50 percent of transfers to resolving vertical imbalance. Amethodology is also developed to determine weights of vertical and equalizing components of transfers through devolution. In the case of the Twelfth Finance Commission, the horizontal component of tax devolution is strengthened by a scheme of equalizing health and education grants.fiscal transfer system, vertical imbalance, horizontal imbalance, Twelfth Finance Commission

QCD Critical Point in a Quasiparticle Model

Recent theoretical investigations have unveiled a rich structure in the quantum chromodynamics (QCD) phase diagram which consists of quark gluon plasma (QGP) and the hadronic phases but also supports the existence of a cross-over transition ending at a critical end point (CEP). We find a too large variation in determination of the coordinates of the CEP in the temperature (T), baryon chemical potential ($\mu_{B}$) plane and, therefore, its identification in the current heavy-ion experiments becomes debatable. Here we use an equation of state (EOS) for a deconfined QGP using a thermodynamically consistent quasiparticle model involving quarks and gluons having thermal masses. We further use a thermodynamically consistent excluded volume model for the hadron gas (HG) which was recently proposed by us. Using these equations of state, a first order deconfining phase transition is constructed using Gibbs' criteria. This leads to an interesting finding that the phase transition line ends at a critical point (CEP) beyond which a cross-over region exists. Using our thermal HG model, we obtain a chemical freeze out curve and we find that the CEP lies in close proximity to this curve as proposed by some authors. The coordinates of CEP are found to lie within the reach of RHIC experiment.Comment: 15 pages, 3 figures, 1 table; minor corrections, to be appeared in Phys. Rev.