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4.3 F inancial Relationship between the Central and State Governments
A complex budgetary system has evolved for the Central and State Governments in order to reduce the economic gap between individual states Sato, 1994. The transfer of funds from the Central Government to
individual states occurs in the following ways Kaneko, 1994;
4.3.1. F inancial transfer through the financial committee-Non Plan Outlay
1 Tax sharing: a constant ratio except for personal income tax and federal consumption tax.
2 Grants-in-aid: the part which fulfills the gap between receipts and expenditure of each state as to tax
sharing
4.3.2. F inancial transfer through the plan committee-Plan Outlay
1 Financial transfer in terms of a plan project approved by the Central Government consisting of
loans and subsidies
4.3.3. Discretional transfer by the Ministries of Central Government-Plan Outlay
1 Central Sponsored Scheme CSS
2 Central Sector Scheme
4.3.4. F oreign support free and charged
It is important for forest and wildlife to discuss on the CSS, because each State depends on it partly. The CSS has included plan outlay since 1991 and belonged to discretional transfer not for plan support from the
plan committee and tax sharing from the financial committee Kaneko, 1994. The amount of the CSS was approved by the National Development Conference NDC, which includes the Central Government and the
Prime Minister of each state. But the NDC doesn’t work as the controversial organization after state regime except the national conference party was to participate. The fact is that the CSS was decided by the
members of the plan committee and each Ministry or an expert of each State. It is used for not only provision against poverty but also rural development including the public enterprise in these days. The
specific man who influenced the allocation of the CSS may be difficult problems, but this division is significant for implementation of various projects.
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India has received financial support from many international organizations. For example, the Japan Bank for International Cooperation JBIC provides concessional long-term, low-interest funds ODA loans for
self-help efforts in developing countries JBIC, 2004. The total of ODA loans has been estimated in the region of RS. 880 billion. This external assistance is passed on to the concerned states as Additional
Central Assistance ACA in order to recast the original terms and conditions Jain, 2004. ACA is given to the states on the same terms and conditions as Central Plan assistance, i.e. as 70 loan and 30 grant for
general states. This system is sure to impose a financial burden on the Central Government.
5. F orest Legislation and Organization 5.1. Central Government
