Though the Local Bodies (Municipal Governments and the Rural Panchayati Raj Institutions) as "the basic units" have assumed increasing importance, the State-Local Fiscal relation has received scant research attention. Therefore, the present empirical investigation -- based on a comprehensive data base related to Rajasthan -- fills the gap. By examining the local fiscal behaviour in all possible aspects. Also, noticeably "analyses the role of grants-in-aid as also domestic revenue" in determination of Local Public Expenditure.