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| rdfs:comment | - Chanchal Kumar Sharma has also propounded two new concepts of fiscal federalism: Vertical Fiscal Asymmetry (VFA) and Vertical Fiscal Difference (VFD). Simply stated, VFA is a state of fiscal asymmetry between the centre and the states. It becomes a state of fiscal imbalance when there is misallocation of revenue-expenditure responsibilities between the centre and the states. On the other hand, a gap emerges when the central government fails to devolve the excess of funds it legitimately collects by virtue of having greater revenue raising powers. When misallocation is addressed by reallocation of revenue and expenditure powers and the resultant gap is addressed by a properly designed transfer system, we are left with VFD, a state of revenue-expenditure asymmetry where there is no imbalance
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| abstract | - Chanchal Kumar Sharma has also propounded two new concepts of fiscal federalism: Vertical Fiscal Asymmetry (VFA) and Vertical Fiscal Difference (VFD). Simply stated, VFA is a state of fiscal asymmetry between the centre and the states. It becomes a state of fiscal imbalance when there is misallocation of revenue-expenditure responsibilities between the centre and the states. On the other hand, a gap emerges when the central government fails to devolve the excess of funds it legitimately collects by virtue of having greater revenue raising powers. When misallocation is addressed by reallocation of revenue and expenditure powers and the resultant gap is addressed by a properly designed transfer system, we are left with VFD, a state of revenue-expenditure asymmetry where there is no imbalance and no gap. Chanchal Kumar Sharma has supported a collaborative federal architecture for India. The author demonstrates in his research that apart from the rise of single state parties, there has been an unprecedented surge in the urge of the non-government stakeholders for more engagement. All this has created new complexities for federal governance in India. These complexities call for collaborative responses in the form of multi-level, multi-actor partnerships. Thus the new federal architecture should not only align resources, competencies and capabilities of the governments at all levels but also engage civil society /non-governmental organizations and private sector in the policy making process. The existing institutional design is inadequate to respond to this change because it was conceived to accommodate a centrally managed cooperative federalism. Thus the author asserts that the time has come to establish a highly interactive architecture of collaborative federalism that will provide channels for much less politicized interactions among the partners of the federation. Such an institutional set up will motivate States to compete for higher level of performance and innovations while actively pursuing cooperation among themselves. The new generation of institutions will also incentivize the Central government to collaborate with the local governments without losing the States’ trust.
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