India, March 4 -- India's fiscal debates have traditionally revolved around how much revenue the Union government shares with states. But the more consequential question emerging today is different: Who will finance and deliver social services in the next phase of India's development?

Over the past few years, Union budgets have steadily prioritised fiscal consolidation and capital expenditure. Where allocations to social sector schemes have risen in absolute terms, social spending by the Union government relative to GDP and total expenditure has declined, even as implementation and utilisation gaps persist across several flagship programmes. Taken together, these trends suggest that India may be entering a new phase of fiscal federalism ...