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The Political Economy of Indian Fiscal Federalism Kenneth Kletzer and

India is a federal state where the institutions of fiscal federalism have been determined by a complex political, social and economic history, in addition to the guidelines imposed by its constitution and legal institutions. In this paper we review theories of the political economy of federalism, summarize India's experience, and begin the development of a model of fiscal federalism in the Indian case that allows for self-interested government decisions, political pressure, and imperfect instruments of control. We show how costly influence activities may depend on the federal fiscal structure in place in India. The Political Economy of Indian Fiscal Federalism Kenneth Kletzer and Nirvikar Singh