Does fiscal federalism prevent or provoke secessionist conflicts? The Autonomy-Equalization Conundrum and the promise of concessionary federalism

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dc.contributor.authorSharma, Chanchal Kumar
dc.date.accessioned2025-10-22T09:58:44Z
dc.date.available2025-10-22T09:58:44Z
dc.date.issued2024
dc.description.abstractDoes Fiscal Federalism Prevent or Provoke Secessionist Conflicts? This article shows that both insufficient fiscal equalisation and excessive redistribution can provoke contestations – especially when economic grievances of low- and high-income states coincide with national minorities. Fiscal federalism must strike a balance – empowering low-income states without expropriating high-income states – to prevent these contestations from escalating into con f licts. The challenge is twofold: First, designing a policy framework that discourages the perverse incentives associated with high levels of equalisation and autonomy. This may be recommended by Independent Fiscal Institutions (IFIs). However, this is not sufficient, because political incumbents – influenced by their incentives and self-interest – might resist these recommendations. Therefore, the second level challenge lies in making these recommendations work. One way is to establish institutionalised mechanisms of inter governmental negotiations which can reveal interdependencies and facilitate (a) continuous dialogue – enabling parties to align their incentives with economists’ recommendations and recognise their common interests where they had previously perceived con f licting ones, and (b) reciprocal concessions – encouraging parties to relax their dominant strategies. Intergovernmental councils with predefined principles for contestations and mandatory outputs (agreed-upon concessions) can yield an equilibrium where no party has a unilateral incentive to deviate, encapsulating the essence of negotiated cooperation and concessionary federalism.
dc.identifier.urihttp://cuh.ndl.gov.in/handle/123456789/1739
dc.language.isoen
dc.titleDoes fiscal federalism prevent or provoke secessionist conflicts? The Autonomy-Equalization Conundrum and the promise of concessionary federalism
dc.typeArticle
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