CONTENTS 1 Background Of Research 1 1.1 Understanding Fiscal Decentralization 1 1.2 Current Scenario In India 1 1.3 SFC Mechanism 3 1.4 Central Finance Commission Framework 4 1.5 Proposal And Framework Of Study 5 1.6 Rationale Behind Case Study 6 1.7 Objectives: 11 1.8 Research Questions: 11 2 Understanding Decentralization 13 2.1 De-concentration 13 2.2 Delegation 13 2.3 Devolution 14 2.4 Advantages of Decentralized framework: 14 2.5 Decentralization and Good Governance 15 2.6 Types of Decentralization 17 2.7 Fiscal Decentralization 18 2.8 The Fiscal Decentralization Initiative 21 2.9 Dimensions Of Fiscal Decentralization: 21 2.10 Conclusion 26 3 Fiscal Decentralization In India 27 3.1 Decentralization and Local Finance Issues in India 27 3.2 The 73rd & 74th Constitutional Amendment Acts 1992 Ushering The Dawn Of Decentralization 30 3.3 Disturbing Fiscal Decentralization Scenario 42 3.4 The Macro (National Level) Scenario 46 3.5 The Micro (State Level) Scenario 47 3.6 Indian Local Bodies' Functional Domain 50 3.7 Institutional Mechanism In India w.r.t Fiscal Decentralization 52 3.8 Need for Fiscal Decentralization Initiatives In India 57 4 Institutional and Organizational Set UP Rajasthan 59 4.1 Classifications of ULBs 59 4.2 Directorate of Local Bodies: 60 4.3 Municipal Law in Rajasthan 61 4.4 First State Finance Commission: 63 4.5 Second State Finance Commission 67 4.6 The Third State Finance Commission 71 4.7 Staffing Pattern 75 5 Analysis Of Fiscal Decentralization Ratios For The State Of Rajasthan 77 5.1 The Share Of Local Bodies In Total Fiscal Revenue: 77 5.2 The Share Of Local Bodies In Total Fiscal Expenditure: 78 5.3 Dependence of Local Bodies On Fiscal Transfers 80 5.4 Degree of Fiscal Autonomy Of Local Bodies 82 5.5 Degree of Expenditure Discretion Of Local Bodies 85 5.6 Expenditure of Local Bodies As A Proportion Of SDP 86 5.7 The Expenditure Scenario Across Local Bodies In Rajasthan 88 5.8 Overview of Changes In Income Composition from 1994-2010 Across All Municipalities 89 5.9 Other Parameters 90 6 Conclusions Drawn and way forward 95 6.1 Main Findings on Political Dimension of Decentralization: 95 6.2 Main Findings on Administrative Dimension of Decentralization: 96 6.3 Main Findings on Fiscal Dimension of Decentralization: 98 6.4 Political Decentralization - Way Forward 101 6.5 Administrative Decentralization - Way Forward 102 6.6 Fiscal Decentralization - Way Forward 103 Annexure 106 1 Eleventh Central Finance Commission Framework - 106 2 Twelfth Central Finance Commission Framework - 107 3 Thirteenth Central Finance Commission Framework - 108 4 Revenue from different sources across all categories of ULBs 109 5 Bibliography 114