In federal finance, the use of quantitative techniques is very important. In fact, policy formulation is very much influenced by the quantitative results pertaining to extent and degree of vertical fiscal imbalances, trends in centralisation and decentralisation, extent of horizontal fiscal imbalances, inter-state disparities in taxable capacity, tax efforts, and fiscal needs of federating states. Another area where quantitative methods are used is the forecast of revenue and expenditure. These are some of the major issues dealt with in this book for appropriate policy formulation.