We analyze the effect of fiscal transfers from the federal to state governments in India—both conditional and unconditional transfers—on gender parity in enrollment at the primary and secondary levels in education, using panel data econometric models. In contrast to previous studies, examining Indian states, we employ a more disaggregate specification for transfers and grants, which is important given the size of this spending in state budgets. Our results provide evidence to suggest that unconditional fiscal transfers have a positive effect on gender equality outcomes but there is little evidence to suggest conditional transfers, even those falling within an educational grants program, have had a strong influence on outcomes. Real income is shown to have some effect but again, not as strong and consistent as one might have expected. Gender budgeting also surprisingly shows a mixed effect, both positive and negative effects and the precise mechanism through which these programs may be working to influence educational parity deserves greater attention at a finer level than is possible with our aggregate data. For policymakers, the results suggest integrating gender criteria in intergovernmental fiscal transfers and grants would strengthen the positive effects on gender equality. Income gains are not sufficient to generate equality of enrollment. Gender budgeting efforts have been insufficient in this critical area of policy. These are important conclusions of which the 15th Finance Commission of India can take note. Further investigation with more detailed fiscal and demographic data and at a finer level of disaggregation of transfer programs is called for.

 

Key Words: intergovernmental fiscal transfers (IGFT), gender equality, fiscal federalism, gender budgeting, panel data

 

JEL Classification Codes: H00, I3, J16