Banking Term: Equalization Grant

Find important banking term that is useful in upcoming banking exam.

Created On: Apr 24, 2015 14:30 IST

Banking Term: Equalization Grant

It refers to funds paid by central government to regional government out of general tax revenue so as to reduce disparities in income or tax rates that would ever otherwise arise from differences in taxable capacity among subordinate government

They are generally calculated based on the magnitude of the sub national "fiscal gap": essentially the difference between fiscal need and fiscal capacity.

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