Working Paper
Fiscal pressure of migration and horizontal fiscal inequality

Evidence from Indian experience

This paper examines the patterns and trends in inter-state migration across Indian states and observes that migration is affected by demographic profile as well as the fiscal profile of states. Econometric estimation suggests that level of vertical federal transfers and its horizontal distribution has an impact on out-migration.

To correct for the extant horizontal fiscal inequality across Indian states, the paper suggests a relatively more progressive transfer system and a developmental fiscal policy stance at the state level to reduce pressure of out-migration to prosperous regions of the country.