In spite of extensive fiscal reforms undertaken during the nineties, India's public finances face numerous problems. While the taxation system remains distortionary and fragmented, government expenditures remain inefficient in providing public and merit goods to the desired extent. Vertical imbalance and horizontal disparities characterise the federal fiscal system. The fiscal reform years have witnessed a sharp rise in the fiscal imbalance and deterioration in state finances. his book undertakes a comprehensive review of the contemporary issues in India's public finances within a long-term perspective tracing its evolution since 1950-51. It critically analyses the causes of fiscal imbalance, the tensions that prevail in centre-state financial relations, the progress of decentralisation, and issues related with the structure of taxation as well as government expenditures. It examines the impact of public finances on the macro economy and looks at fiscal policy options for growth, stability and poverty alleviation.