GSDP share as criterion for central-State transfers - The Hindu
www.thehindu.com
Date posted: January 18, 2026 at 2:23am
An indirect and more reliable proxy is needed to estimate the accrual of central taxes at the State level
Expanded Summary
The article titled "GSDP share as criterion for central-State transfers" discusses the complexities surrounding the allocation of central taxes to various states in India. It highlights the limitations of using the Gross State Domestic Product (GSDP) share as the sole criterion for distributing these transfers. The author argues for the adoption of a more indirect and reliable proxy, which would provide a better estimation of the accrual of central taxes at the state level. By analyzing the current methodologies and proposing alternative approaches, the article aims to contribute to a more equitable and efficient distribution of resources among states, ultimately fostering balanced economic growth across the nation.
What you’ll learn
Understand the limitations of using GSDP share for central-State transfers.
Discover alternative methods for estimating central tax accruals at the state level.
Explore the implications of tax distribution on economic equity among Indian states.
Why this matters
This discussion is crucial as it directly impacts the financial health of individual states and the overall economic balance in India. An equitable distribution of central taxes can help address regional disparities, ensuring that all states receive adequate funding for development projects and public services. By refining the criteria for tax transfers, policymakers can promote sustainable growth and improve the quality of life for citizens across diverse regions.
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