In India, the contortions inherent in the constitutional arrangements for sharing fiscal powers between the Centre and the States necessitate inter-governmental transfers. Such transfers have always attracted in-depth debates amongst the policy makers, practitioners and researchers in the country. The paper intends to review and synthesise the research knowledge on the system of fiscal federalism India and impact of intergovernmental transfers from the centre on the state government. As an aftermath, the study reviews and examines various research articles published between 2000 and 2019. The study also presents a comprehensive literature review specifically in Indian context. The assessment of these studies reveal that there is wide economic disparity between various states and intergovernmental transfers have not been able to successfully reduce this gap. This paper may be expedient source of information to the researchers and managers who are willing to explore the concept of fiscal federalism and its various aspects in India.