Intergovernmental fiscal relations has been an important area of research at NIPFP. These include studies on fiscal relations, both between the Union and State governments, and the State and the local governments. Various aspects of fiscal federalism including expenditure assignments and fiscal instruments for revenue generation at different levels of the government have been studied. Between the Union and the State governments, the horizontal distribution of expenditure across States and the extent of vertical distribution of revenue and expenditure have been researched upon. On fiscal relations between the State and local-governments, analysis of the role and performance of rural and urban local bodies, and the degree of devolution of funds and functions at the  local government level have been the focus of research. Decentralization in sectors like health and education, and equalization grants for providing basic public services across States have also been a part of the institute's research in this area.