Fiscal context of targeting programs

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The constitution of India ordains distinct responsibilities for the central

and state governments vis-à-vis expenditures and revenues for each level

of administration. The fi scal architecture of the federation is designed to

allocate responsibilities for revenue and expenditure between the center

and the states, as well as to devolve resources from the center equitably

to different regions of the large country. The structure, summarized in

Table 2.3, refl ects attempts at providing vertical and horizontal balance by

emphasizing revenue collection at the center and expenditures at the state

level.2 The central government collects all the major taxes and is obliged by

Table 2.3 Expenditure and revenue responsibilities of center and states

Central government expenditures Central government taxes