Fiscal Decentralization in India

On 1 October 2026, the Department of Statistics & Data Science at Christ University, Pune Lavasa Campus, organised a guest session titled Fiscal Decentralization in India for students of ECO201-3L Public Finance. Held in the Seminar Hall, Management Block, from 11:00 AM to 12:30 PM, the session was delivered by Prof Hari Kurup K K, Advisor to the 7th State Finance Commission, Government of Kerala. It began with the core idea behind fiscal decentralization: assigning taxing, spending and borrowing powers to lower tiers of government so that public services match local needs and preferences more closely. 

Drawing on the classical arguments of fiscal federalism, the session noted that governments closer to citizens have better information about what communities require, and that decentralization can improve efficiency, responsiveness and accountability in delivering public goods such as education, health, sanitation and local infrastructure. At the same time, students were introduced to its challenges, including differences in revenue capacity across regions, the risk of widening inequalities, limited administrative capacity at the local level and overlaps in responsibilities between levels of government. 

The discussion then moved to India's federal structure, in which the Constitution divides functions and resources between the Union and the states, and the 73rd and 74th Constitutional Amendments created a third tier by giving panchayats and municipalities a formal role in local governance. Students learned how Finance Commissions are key institutions in this arrangement: the Union Finance Commission recommends how central taxes and grants are shared with the states, while State Finance Commissions review the finances of local bodies and suggest how state revenues should be shared with them. Prof Kurup's experience with the State Finance Commission in Kerala gave the session a practical grounding, helping students see how principles such as equity, need and fiscal capacity are turned into transfer formulas and policy recommendations. Concepts from the Public Finance syllabus, including vertical and horizontal fiscal imbalances, conditional and unconditional transfers, expenditure assignment and the effects of GST on state finances, were connected to real policy questions. 

The session also highlighted the importance of reliable data and statistical analysis in designing fair allocation criteria, which made it especially relevant for students of Statistics and Data Science. For those considering careers in economics, policy research, public administration or data analytics, it offered a useful picture of how evidence informs government decisions. The interaction encouraged students to think critically about the trade-offs between efficiency, equity and autonomy, and to recognise that fiscal policy decisions directly shape the quality of services people receive in their neighbourhoods. 

The session aligned with SDG 4 (Quality Education), SDG 8 (Decent Work and Economic Growth) and SDG 16 (Peace, Justice and Strong Institutions), since strong and accountable local governments are essential for inclusive education, livelihood opportunities and transparent institutions. Overall, the event bridged classroom learning and policy practice, strengthened students' understanding of India's fiscal federal framework, and encouraged them to see public finance as a field with real consequences for development and governance. The department extends its sincere thanks to Prof Hari Kurup K K for sharing his time, experience and insights with the students.