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Synopsis The indebtedness of the states in India has been growing rapidly, its major cause being the high corporation of loans in the Central assistance for the plans. The states, particularly the backward states, encounter serious difficulties in servicing such loans. Several times, states are compelled to borrow for repayment of the principal and interest resulting in reverse flow of resources form the states to the centre. This trend has posed severe constraints before the states finances and has, infact, eroded their financial autonomy. This is actually the most abrasive and irritating element in the centre-state financial relations. Naturally, the states have been clamouring for more powers and autonomy.

The present book makes an attempt at various aspects of the macro-economic problem of central loans to the states, particularly the backward states, since the Fourth Five Year Plan. The magnitude, direction and impact of central loans on the backward states has been discussed critically loans and suggestions have been given for solving the problem. The book may also serve as an excellent reference document for further research.