Fiscal Responsibilities of Indian States

India's fiscal problem has deep roots in its federal fiscal system where multiple players face the problem of co-ordination. The root causes of the endemic fiscal crisis by both centre and states are to be found in the simultaneous pursuit of fiscal objectives and policies which are in themselves incompatible. The effect need to achieve fiscal consolidation must be seen as the joint responsibility of the central and state governments. To achieve vertical and horizontal balance, both the centre and the states need to raise the levels of resources relative to their respective revenue bases, exercise restraint in undertaking unwarranted expenditure commitments