Obstacles in Economic Growth of Madhya Pradesh


  • sweksha mahendra khobragade devi ahilya university
  • rekha acharya devi ahilya university




Economic Growth, Central Government, Local Bodies, Financial Allocation


In any country, the fruits of economic growth transfers up to grass root level through various channels and modes. In India there is three tier system of transferring resources- especially financial resources - central government to states and from states to local bodies. This system has been questioned by different researchers from time to time as this flow of resources is not smooth but skewed. Many time gaps are observed between projections and actual receipts. This time lag pushed the development on back foot. This paper has analysed the trend and gaps in the financial transfers from centre to states. Further, it tried to identify hurdles on the ground of financial allocation to the state by finance commission. The analysis is based on the secondary sources of information. We have divided the administration in three tier- central, state and local bodies. The trend and gap in the financial allocation by the central government to the state and the state to the local bodies shows delay in disbursement. The funds flow from higher level governments to the lower level government is very week and lack devolution design or principle. This creates hindrance in the economic growth of the state. The results reveal higher actual expenditure than the approved plan due to gap between central and state financing. This indicates the deficit financing, increased burden and uneven growth in the economy. It may also imply a response to increasing inequalities in per capita incomes within state.

Author Biographies

sweksha mahendra khobragade, devi ahilya university

Junior Research Fellow in school of economics devi ahilya university Indore

rekha acharya, devi ahilya university

associate professor school of economics devi ahilya university Indore


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Rangarajan, C. and D.K. Srivastava (2008), “Reforming India’s Fiscal Transfer System: Resolving Vertical and Horizontal Imbalances” (with Dr. C. Rangarajan), Economic and Political Weekly, June 7, 2008, also published as MSE Working Paper No. 31.

D.K. Srivastava and C. Bhujanga Rao (2009), “Review of Trends in Fiscal Transfers in India”, July 2009, Madras School of Economics

Madhya Pradesh State Finance Commission, Bhopal, Summary of the Report (2006-2007)

Finances of Urban Local Bodies in Madhya Pradesh - A Macro Review (2010-11)

Pravakar Sahoo and Amrita Sarkar, “Changing Dynamics of Centre-State Financial Relations”, YOJANA June (2013)

Planning Commission (Financial Resources Division) Brief for Annual Plan (2013-14) Madhya Pradesh




How to Cite

khobragade, sweksha mahendra and acharya, rekha (2016) “Obstacles in Economic Growth of Madhya Pradesh”, Journal of Global Economy, 12(3), pp. 195–204. doi: 10.1956/jge.v12i3.422.




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