Financing Of State Five Year Plans In India

Non-correspondence between allotted functions to each layer of governments and assigned source of revenues to perform them has become a characteristic feature of almost all federations of the world, India, being a federation no exception. Because of the limited tax powers available to the States under the Constitution, their town resources fall short of their expenditure requirements for carrying out the assigned functions. Introduction of planning in the country has further widened this gap by adding to the States requirements of resources. The problem is particularly difficult in case of relatively backward States, like Rajasthan, where the need for accelerating the pace of economic development is much more pressing and hence a larger plan size is warranted. At the same time, capacity to raise resources is relatively less. The question of plan financing, therefore, assumes special significance for a backward State. This pioneering study attempts here to analyse the various sources of plan financing in Rajasthan over a period of sixteen years (1969-70 to 1984-85) and to explore the possibilities for further resources mobilisation. Basic concepts related to plan financing have been dealt with in detail to the benefit of those who are less familiar with them. In spite of the data limitation, comparison with other States has also been attempted. The technique of Marginal tax rate, income elasticity of revenues and Multiple regression have been employed to adjudge the resource mobilisation efforts of Rajasthan vis-à-vis other States. The book will surely prove beneficial for post-graduate students, research scholars, planners, policy makers and for all those who are interested in provision of adequate financial resources to the state exchequer for implementation of large and larger development plans.