Obstacles in Economic Growth of Madhya Pradesh

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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.