{"id":26353,"date":"2024-09-06T05:05:24","date_gmt":"2024-09-05T23:35:24","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=26353"},"modified":"2025-04-08T01:30:59","modified_gmt":"2025-04-07T20:00:59","slug":"vertical-fiscal-imbalance-vfi","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/vertical-fiscal-imbalance-vfi\/","title":{"rendered":"What is Vertical Fiscal Imbalance (VFI)?"},"content":{"rendered":"<h2><strong>About Vertical Fiscal Imbalance (VFI):<\/strong><\/h2>\n<ul>\n<li>It is defined as the share of<strong> sub-national governments\u2019 own spending not financed through<\/strong> their <strong>own revenues.<\/strong><\/li>\n<li>A VFI describes a situation in which <strong>revenues do not match expenditures for different levels of government.\u00a0<\/strong><\/li>\n<li>In other words, VFI is the fiscal gap in the sub-national governments <strong>due to improper decentralization o<\/strong>f <strong>public revenue and expenditure.<\/strong><\/li>\n<li><strong>This asymmetry<\/strong> in revenue and expenditure decentralization is <strong>called Vertical Fiscal Asymmetry (VFA).<\/strong><\/li>\n<li>It is a <strong>structural issue<\/strong> that can be <strong>resolved if revenue and expenditure responsibilities<\/strong> can be <strong>reassigned<\/strong>.<\/li>\n<li>It can be <strong>corrected through<\/strong> the <strong>financial transfers from<\/strong> the <strong>Union to the state governments.<\/strong><\/li>\n<li>What&#8217;s the <strong>Difference Between Horizontal and Vertical Fiscal Imbalance?<\/strong>\n<ul>\n<li>The simple difference between horizontal and vertical fiscal imbalances <strong>lies in who they affect.<\/strong><\/li>\n<li>With a <strong>horizontal fiscal imbalance<\/strong>, <strong>revenues and spending<\/strong> are <strong>mismatched for different regions of<\/strong> the <strong>country<\/strong>.<\/li>\n<li>In a VFI, revenue and spending are <strong>not balanced for different government levels<\/strong>.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<hr \/>\n<h3><strong>Q1<\/strong>: What is fiscal federalism?<\/h3>\n<p>Fiscal Federalism refers to the financial relationships and arrangements between different levels of government in a federal system, such as the central (or federal) government, state (or regional) governments, and local governments. The primary focus is on how powers, responsibilities, and resources are divided among these different levels of government, particularly in terms of taxation and expenditure.<\/p>\n<p><strong>Source: <\/strong><a href=\"https:\/\/epaper.thehindu.com\/ccidist-ws\/th\/th_delhi\/issues\/98322\/OPS\/GIDD9U8SR.1+GILD9VBFM.1.html\" target=\"_blank\" rel=\"nofollow noopener\">What is vertical fiscal imbalance?<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Vertical Fiscal Imbalance is defined as the share of sub-national governments\u2019 own spending not financed through their own revenues. <\/p>\n","protected":false},"author":5,"featured_media":26354,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"class_list":{"0":"post-26353","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-prelims-current-affairs","8":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/26353","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=26353"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/26353\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/26354"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=26353"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=26353"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=26353"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}