Intergovernmental relations in Nigeria: improving service delivery in core sectors

According to the Nigerian constitution, main public sector responsibilities are split across various government levels. Thus, no sole government could deliver radical improvements in service delivery on its own, which means that coordination and cooperation are pre-requisites. However, the existing mechanisms and institutions for inter-governmental policy coordination are weak and need strengthening. This paper suggests the following priority directions for reforming inter-governmental financing arrangements in Nigeria: a. more attention to the equity dimension of revenue sharing b. strengthening government accountability for utilization of public money in general, and for use of a common pool of funds such as the Federation Account in particular, and c. introduction of specific grant schemes directly linked to expansion of sub-national government financing in key sector

Federal Transfers and Fiscal Discipline in India: An Empirical Evaluation

This article examines the relationship between federal transfers and fiscal deficits in India. The current system of transfers has been criticized on the grounds that it distorts the incentives for states to promote fiscal discipline. We analyze the relationship between transfers, state domestic product, and fiscal deficit for a panel of states during the period 1990 to 2010. The article finds a positive long-run relationship and bidirectional causality between primary/gross fiscal deficits and non-plan transfers. Further, there is a negative long-run relationship and one-way causality from state domestic product to transfers. These results are confirmed by multivariate cointegration analysis, which finds a long-run relationship between fiscal transfers, state product per capita, and state primary deficit. The evidence in the article is consistent with the system of fiscal transfers being ‘‘gap filling.’