In contrast, there are those who aver that central government control of the fisc maximises the government’s ability to use Keynesian policies to regulate the supply and demand of key factors of production, including money supply. “In this view, both efficacy (effective government) and equality (through the distribution of tax receipts, expenditure) require a high degree of fiscal centralisation and a strong centre able to intervene to correct the imperfections of markets.”

Citing studies by Francis Castles about how federal and unitary states compare in terms of their impact on economic prosperity and governance, the author notes that decentralised political and fiscal arrangements are associated with superior long-term economic growth rates, and lower levels of inflation, though decentralisation had no discernable impact on levels of employment.

Another study that O’ Duffy mentions is of Hans Kerman, who compared 18 countries. The performance of the larger states, such as Germany and France, was better than the less modernised states of Spain, Portugal and Ireland, but these differences are less to do with federal versus unitary status and more to do with levels of industrialisation and post-Second World War subsidies for rebuilding war-torn economies, the author observes.

Recommended read.

Public distribution system (PDS), as a scheme, has failed miserably, rues R. Gopinath in one of the essays that P. Nayak has included in Growth and Human Development in North-East India (www.oup.com).