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Modi govt opens a Pandora’s Box: States can lose political clout if they develop well

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The Modi Govt has instructed the Finance Commission to use 2011 census figures instead of the 1971 figures, to apportion revenue from taxation between the states.

It is not often that a seemingly technical issue points towards a potentially grave challenge for the survival of our nation itself, but that is exactly what has happened this month. A letter sent to 10 Chief Ministers and the Prime Minister by DMK leader M.K. Stalin, questioning the “ill-conceived” terms of reference of the Fifteenth Finance Commission, has revealed how a thoughtless decision by the Modi Government has opened a Pandora’s Box with incalculable consequences for the country.

The Finance Commission is one of the less well-known institutions of our governing system. It is appointed every five years to review and decide how the country’s revenue from taxation will be apportioned between the states. The Finance Commission uses various criteria to determine this, including each state’s percentage of the national population. But for more than four decades, it has based itself on population figures from the 1971 census.

That may seem odd, since we have had four censuses since 1971 and new numbers have been available to successive Finance Commissions. But the reason for this is very simple, and it was made explicit in relation to a far more vital issue – that of political representation in our Parliament. In 1976, the omnibus 42nd Amendment to the Constitution decided to freeze the allocation of Lok Sabha seats to our states for 25 years to encourage population control, by assuring states that success in limiting population would not lose them Lok Sabha seats. In 2001, the NDA Government of Prime Minister Vajpayee extended this arrangement for another 25 years; its proposal, which became the 91st Amendment, was unanimously adopted by all parties in both Houses of Parliament.

The thinking behind this policy was clear: it was based on the sound principle that the reward for responsible stewardship of demography and human development by a state could not be its political disenfranchisement. While there is some logic to the argument that a democracy must value all its citizens equally — whether they live in a progressive state or one that, by failing to empower its women and reducing total fertility, has allowed its population to shoot through the roof — no federal democracy can survive the perception that states would lose political clout if they develop well, while others would gain more seats in Parliament as a reward for failure.

This is the carefully balanced arrangement that the Modi Government has now so carelessly undone by instructing the Finance Commission to use the 2011 census figures now instead of the 1971 figures, causing Stalin to erupt.

He is not alone. Karnataka Chief Minister Siddaramaiah, in tweets and a Facebook post, has articulated a strong case; and Pawan Kalyan, the former film star who has founded a political party in Andhra Pradesh, has done so as well. “Is the success of south Indian states going to be used against them by Union of India?” he tweeted, expressing “genuine concern that population based formula for sharing tax revenues between states & Center would hurt south Indian states.”

Siddaramaiah’s post goes much farther, raising a whole host of issues relating to Indian federalism, from Karnataka’s ancient history and its right to its own flag, to the importance of honouring the Kannada language and the unfairness of the current tax distribution system: “Historically, the South has been subsidizing the north. … For example, for every one rupee of tax contributed by Uttar Pradesh, that state receives 1.79. For every one rupee of tax contributed by Karnataka, the state receives 0.47. While I recognize the need for correcting regional imbalances, where is the reward for development?” He adds his concern that population is an important criterion for the apportionment of central taxes. “For how long”, he asks, “can we keep incentivizing population growth?”

These are important questions that the rest of India can ill afford to ignore. The states of the “cow belt” – the Hindi-speaking heartland, once called the BIMARU states – have comprehensively failed to improve their development indicators, notably relating to female literacy and women’s empowerment. As a result, their population growth has outstripped that of the southern states. And thanks to the Finance Commission’s new formula, that makes them eligible for a larger share of tax revenues.

We can probably dodge this bullet for now. I have raised the matter with the Finance Commission’s Chairman, N.K. Singh, an adroit and skilful player of the bureaucratic game who – though he pointed out to me that he has no say in the terms of reference given to him — has been left in no doubt about the temperature of the hot potato that has been dropped into his hands. Singh appreciates the seriousness of the issue and will no doubt find a formula that could defuse the crisis for now. He has no choice but to use the 2011 census, but population figures are just one of several criteria used in his Commission’s calculations, and he can reduce the weight he gives to this particular factor in finalising each state’s revenue share.

But the country should pay attention to the greater dangers. While northern states like Bihar, Jharkhand, Madhya Pradesh, Rajasthan and Uttar Pradesh had a decadal population growth rate over 20 per cent between 2001 and 2011, southern states like undivided Andhra Pradesh & Telangana, Kerala, Karnataka and Tamil Nadu grew at less than 16 per cent in the 2001-11 period. My own state of Kerala has the country’s lowest growth rate (4.9 per cent in 2001-11, and dropping, it is estimated, to negative growth by 2021). That is one-fifth of Bihar’s growth rate. Why should Kerala be punished for its impressive performance by losing seats in Parliament and thereby being forced to dilute its voice in national affairs?

The answer, of course, is that those are the rules of democracy: one-person-one-vote means the more people you have, the more political clout, and tax rupees, you get. But in a country like India, whose diversity is held together by a sense of common belonging but constantly under strain from regional, religious and linguistics tensions, such an answer risks rupturing the fragile bonds that hold us all together.

As it is, the Hindi-Hindu-Hindustan politics of today’s BJP is very different from the conciliatory coalition-building of the Vajpayee era. Their blatant majoritarian triumphalism, the brazenness of the Hindi supremacism that infuses their discourse, and the culture of Aryavrat domination that infects their attitudes, have already raised disquiet among many Southern politicians.

The only remedy is to acknowledge that we need a more decentralised democracy, one in which the central share of tax resources is not so crucial, and the political authority of New Delhi not so overwhelming. That could make the concerns raised by the new census figures less relevant.

But as long as our system is what it is, we need to run it sensitively. That is something that, on this occasion again, the Modi government has failed to do.

Dr Shashi Tharoor is a Member of Parliament for Thiruvananthapuram and former MoS for External Affairs and HRD. He served the UN as an administrator and peacekeeper for three decades. He studied history at St. Stephen’s College, Delhi University, and International Relations at Tufts University. Tharoor has authored 17 books, both fiction and non-fiction; his most recent book is ‘Why I am a Hindu’. Follow him on Twitter @ShashiTharoor

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34 COMMENTS

  1. This is why south indians felt beeing robed.almost all state own properties and companies taking over by few guj.tax money is diverted into cow belt.worst than british era for south india.

  2. Southern states should form a collective and ask for the elimination of the central finance commission. They could form their own southern finance commission and share tax revenue between themselves and share only the surplus revenue to the central government. The southern states depend each other on water, power and agriculture produce and this type of arrangement will solve water sharing issues too. Karnataka and TN were fighting for Cauvery but they co-operated during the Veerappan hunt. The argument here is you won’t donate your life saving to a beggar and then beg to feed your children. Likewise, the North can form their own collective and share the tax revenues. Also, the south should ask for a change in how votes are calculated in parliament like make them based on the last 5-year tax revenue percentage. The world bank has voting rights based on the amount of money contributed by each country. This will make the states generate more tax revenue to have control in the parliament and very soon India will be a developed country. India was lead by north Indian politicians all these years who failed their states and kept them underdeveloped. when you select a captain for a team you select the best performers not someone who is losing all the time. The north Indians who talk about nationalism will never vote or elect any candidate from south, west or northeast India.

  3. Quite a less than ordinary and anti Indian-integrity article presented, one wonders whether the ignorant vice of author’s political party president fast spreading to cadres, instead of the collective wisdom of experienced stalwarts helping educate the green president!
    Apparently the author conveniently forgets that the governments ruling India for longest time after independence have fraudulently ignored the very objective of bringing economic & social equality across Indian states by hobnobing in religious, cast & regional divisive politics. One need not mention which political party was entrusted to govern in the first foundation quarter century years of our green democracy, that was the most important period to inculcate spirit of development of country as a whole – One integrated India and therefore, same party is responsible to cause highest damage to the socio-economic fibre of the country. Let the lerned author enlighten about any sincere efforts ever carried by any govt his party represented, to eliminate economic devides between states. Advocating the baseline 1973 is a ludicrous misnomer, there has long been need to set right the parameters that have long been flawed & ignored for worse. High time that responsible learned citizens stop confusing the masses over & over, misusing one’s stature, let useful & constuctively harmonizing articles flow.

  4. The Aryan imperisalism has taken over ever since British imperialism ended, The aryans opposed Mandal so much so reservation for backward classes were put on back burner for fifty years. N:ehru Shastri and Indira gandhi were culprits 99 per cnnt of thermal plants of so called national power corporation are located above the vindhyas. National hydel corporation has no plant in southern India, Power tranmission lines from norht to south are yet to be laid. The natural gas found in Bombay high was sent to Uttar pradesh. the gas found in Krishna Godavarai basin is being sent to Gujrat and Mahaashtra. You have a bullet train from Mumbai to Ahmedabad. there is a single railway track from Mumbai to Chennai. You have dedicated railway corridors between Delhi amd Mumbai and Kolkata and Lundhiana. NO railway corridor in Chennai Visakhapatnam or Chennai Bengaluru. Brand new railway passenger coaches manufactured by ICF is sent to all other parts of India except southern railway. Singapore alirline is not allowed to land in Madurai airport. Railway road civil aviation infra in south is minimal but the Mugal durbar takes away tents and thousands crores of software exports from southenr India for the benefit of Northern India. We were treated as a colonby by the British. Things have not changed in the last sixty years. Southern states are encouraged to fight over inter state water disputes. Long live India

  5. This article deserves serious attention by one and all, otherwise the Dravidian populated southern States might gang up together and ask for fair justice even to the extend of leaving them alone to determine their own future. Such steps will be a big blow to the unity in diversity of this great Country.

    • More than the revenue distribution or the electoral representation, it’s the diversity of this country that is being threatened. The Income Tax department in Tamil Nadu recently refused to accept an official document only because it was in Tamil. The same document was accepted a few years ago by the same department. The imposition of Hindi and the sidelining of other regional languages is a severe threat to the unity and diversity of this nation.

  6. Well juggled arrival to make it looks like written by learner politician. But the fact remains the north south decide has come to raise its head again amid in security from the NDA,s increasing influence.Why mr Stalin has not spoken a word about cheap plans aimed at deviding the society on the basis of religion in the so called developed, advanced tech sewy south indian belt.Siddharsmaiya ,s act.Again asking for saperste flag by Karnataka, I Stalin,s view is it in the interest of nation.They are so scared of change of base because if the number of parliamentarians from north increase it will have a far reaching impact in terms of major decisions.As far the various growth rates of population cited, Kerala for e.g. their growth infact is contributing to the so called cowbelt (such terms should not used by so called politician s) as major population form that state has migrated due to lack of oppertunies there.These arguments and counter arguments can go on for ever, better be progressive and accept the changes it will be better for the nation, instead of inciting the old subvert issues of North south decide on which his party has survived for so long.

    • You have once again failed to understand the issues posed by the article. Leave it. its beyond your degree of intellect or comprehension.

  7. One is aghast about Taroor choice of leaders quote about the Finance Commissions modus operandi of allocating financial resources. Men of straws are quoted. This pudding is muddled and quagmired into parliament seats allotment issue which is a non issue. This”North glitters, South litters” North lives:South limps superlatives is not quite new but since the time of Annadurai.Its so unfortunate a person who worked in World body like UN stooped so low to stoke regionalism in the guise of this article. One would like to remind him about the running race conducted for the mentally challenged persons,where when participant falls,all others stop,look back only to come back to pick the fallen guy to hit the goalpost all together!This Taroor must be admitted in that school early.

  8. It seems too convenient to base the future on 1971 census – Mr Tharoor, shouldn’t this be fixed to bring us into reality! Else why not use 1951 census so we are even more distorted vs. reality. I believe India’s population has doubled since 1971, so it’s really stupid to continue to base all financial allocations based on 1971.

  9. “North ” is paying the price of having good for nothing prime ministers from there. They placated the “Souths” political ambitions by providing maximum economic support to them. Take a look at the number of central public sector undertakings in Karnataka, combined AP and Tamil Nadu and compare with UP, Bihar, Rajasthan and MP. All advanced technology centres and employment avenues have been in South since the beginning. Educated persons from north face discrimination in job opportunities, even in central psus. You can find lakhs of those from South in state government services in north,, but hardly anyone from north in southern state government services. Talking of growth rate of population in north. Know the percentage of the so called minorities in North, who are working day and night to become a majority? Think again with India as a whole, not in terms of north and south.

  10. Shashi Tharoor writing about modi in the print.. nonsense written and published.Tharoor for his calibre should not be supporting the Congress. He has become a true politician. Tharoor writing crap to stay relevant and stooping to a Congress type low. What an intelligent man wasted on the Congress.

  11. South says they r subsidizing North… While they forget that North is protecting them by sending 10 times more people to borders. Therefore, North is maKing south live life.

    • There are 21 battalions under madras regiment and they serve the border too. The government controls the recruitment of people from the south by conducting the army recruitment tests in English and Hindi only. we have so many enemies due to the failed policies of the north Indian politicians.

  12. This Govt tweaked the basis for calculating GDP and inflation to influence the figures.
    This is one more attempt to use this Govt’s majority to change all the rules of a country with federal structure and maintaining a unified approach. The norms should be framed by the Finance Commission to include all relevant factors. Using population as a criterion may not be rational. The so called famed Gujarat model of development has not been as good as it is touted on various parameters. Kerala though a much smaller State has fared better on most important social factors than any other State. This Govt has changed the FCRA and Representation of Peoples Act as part of a Finance Bill and passed with great majority to suit the ruling party. Is the next target the Constitution itself being changed as is being hinted in various ways by the RSS and some young leaders?
    If nothing else succeeds to help his party will amending the Constitution

  13. Predominantly,lion share of the people across the globe are ignorant stupids. The reflection of their stupidity is manifested in the form of political parties and their govt formation. Since most party leaders are the reflection of these stupids called people , you really can’t expect anything better

  14. Sir,

    It’s a flawed arguement in a way that exaggeration is being used to create a hoopla of injustice in advance. How can you reach to a conclusion without the completion of process and due perusal of recommendations. As far as Mr. Siddharammaiah is concerned, he is playing all available tricks to win the election.

    As far as uniqueness of Indian democracy is concerned, the government is duly addressing it through programmes like Ek Bharat Shreshtha Bharat. No official position like Hindi-Hindu-Hindustan is in discourse. It’s your creation for garnering votes through perpetration of wrong apprehension.

    Moreover, it was Pandit Nehru (whom you deify), who wielded democracy in this imbalanced manner. Demand for Andhra Pradesh just after the independence is the best example. North may also argue that it is because of their huge population that cheap labour is available throughout India. Can you think of a prosperous South sans cheap labour? No.

    Yet, you have cherrypicked few points suiting your electoral needs. It is this democracy only in which you are taking such egregious stances to win that one vote of one person, North and South alike. It was never expected that even you would fall prey to now debunked Aryan Invasion Theory and use phrases like supremacy of Aryavarta. Please do not divide us.

  15. Fail to understand why must GOI stick to old date, 47 yr old, to apportion payments to states, with time requirements have changed, undeveloped states today need more funds.
    Rather you should question reason behind 1979 data was used by UPA 1&2. SADLY you have refrained from questioning the most corrupt regime in India. Why we Infyí

  16. Look PM Modi photo as if he is begging vote. His and BJP’s three “H” policy will not work.
    BJP must be wiped out in 2019 election, it is a dangerous party and funky too.

  17. The same is the case with reservations. Why are the so called politicians rethinking about reservations even after 70 years of independence.

  18. It’s interesting that Tharoor worries about demographic balance between states. Would he apply the same principle across religions as well? If different religions have different growth rates, should we abandon one-man one-vote principle? Don’t religions that have higher birth rates gain a greater voting share? What is the reward for development if we lose p0litical strength? In how many different directions can we extend this argument?

    And by the way, after Tharoor’s party loses in Karnataka he will not be evoking the North-South divide again. In fact, as long as they participated in the Bihar government he kept his mouth shut on this issue!

  19. I now sincerely believe the majoritarian Modification need to mend its way or it will be gone for greater good and we will definitely return to local coalition goons of 1990

  20. Disappointed with Shashi Tharoor. Politics and political representation in the parliament in one thing, but wealth distribution or central economic assistance is another. You may ask to freeze the number of MPs your state send to the Union Parliament, even replace all MPs by the CM only to the union parliament, the parliament then becomes a club of state leaders, one from each state. Not a problem. If needed, divide the big states into smaller states as well to discourage sub-state nationalism. But economic assistance is a completely different ball game altogether. The services of the state to be enjoyed by its citizen should be independent of the person’s caste, her religion, her language, her political beliefs, her participation in the military and govt, her sexual preferences, her gender and of all things, the FERTILITY of her mother. This is the basic spirit of Humanism. Not negotiable. Period. This tells us why, Mr. Damodas Narendra Modi, son of a maid, and without any glossy degrees from glossy universities is far far wiser than all of us. Mr. Modi save us from our mediocre middle class intellectualism and selfishness. Just imagine, the minority Sikhs, the most courageous martial community in India, who had made huge sacrifices for the country, in the army, navy, airforce etc and then asking for a greater stake of the resources against the selfish and escapists you know who. Imagine Tharoor asking for reduce resource allocation for the Muslims because they are now 14 percent compared to 11 percent a decade or two back. Just hopeless rotten hypocrites.

    • when political leaders of the ‘failed states’ in controlling their population growth despite their pathetic living conditions cannot be couched in national feelings of unity and humanism and ‘the fertility of mother’. Here the simple point is that merits should be rewarded not punished, which Shashi Tharoor has conveyed well and clear. Nationalism and humanity must be shown not by demanding or supporting a greater share of revenue or more number of seats in parliament, but through efficient administration and good governance. Without doing all that, throwing emotional baggage of nationalism and humanism is nothing but despicable and should be ashamed of.

    • Mr Ghosh, you missed the main point of the article ie, ‘ should we incentivize blatant population growth in giving more tax rupees’. We don’t have to politicize the issue or someone’s humble background cannot become detrimental to how my taxes are shared. ( Distractions galore)

      Regardless,
      Sub- nationalism: what is wrong with it? In Karnataka we pride ourselves with what we have achieved through our hardwork. We have rich progressive history in literature ( max gyana peeta awards), infrastructure ( first people to get electricity in India/Asia), culture and diversity ( dasara, Jain history, kodava culture, etc), fourth largest technology cluster in the world etc. We pride what our state has achieved and we celebrate it. But it is not by exclusive of indian-ness, inclusive of it.

      Military Service: In service to military, in percentage to population, after punjab, Kerala sends second highest people to the military even today. But we from the south have never used that to drum up stories or belittle other states that we are more patriotic ( Punjabis themselves are humble about it).

      The issue at hand is how we share our taxes and what should we incentivize? Should we incentivize population growth or bring it to self-replenishing levels? Should we incentivize human development of citizens or should we look the other way round?

      Secondly, from down south we have been funding the system, but for how long should we be doing it is our debate here. If UP, Bihar, Rajasthan, MP get their act together and solve their problems there is nothing like it, we are more happy to see them progress. But if they don’t, we intend to disincentivize it, that’s the thinking.

      Why should we pour money into something which is not improving its citizenry or their development indicators?

      We want our taxes in Karnataka to go to building e-learning in our govt schools, more air conditioned buses for our folks, more roads, more water filters in our schools(we have the finest mid day meals scheme in entire south Asia) etc.

      And you using modi’s humble background, Sikh bravery, southern escapist theory, political color, middle class whatever, etc is pure gas and has no value or coherence to the issue. Thanks
      RD, Bangalore

  21. Well written. But significance of Census 1971 as base instead of 2011 became clear only towards the end of this article. Pl keep language simple so that non-experts viz. commoners can grasp the sinificance easily.

  22. Freezing the number of seats each state gets in the Lok Sabha in 1976 – the only feature of the 42nd amendment one applauds – and calculating its share of Central revenues partly based on the 1971 census are thoughtful decisions, which impartial observers who wish India well would endorse. 2. The faultline between North and South will sharpen if these decisions are revisited. There is talk, after a very long time, of Dravida Nadu. Bollywood has done a much better job of popularising Hindi among the ” Madrasis ” than the Department of Official Language could ever hope to. We can and should take our national unity and integrity for granted. However, we are still a young nation, some parts in the north east are still holding out a little obdurately. There is need for statesmanship of the sort Pandit Nehru and Sardar Patel displayed.

    • Please. The talk of Dravida Nadu arises only because the BJP has won all of North India. If the Congress or the regional parties were in power in North, they would not raise the issue.

      And who raises the issue? Karnataka CM because he sees the BJP threat in the coming elections and DMK because they see the Rajinikanth threat. Maybe they can resolve the Cauvery water issue first to demonstrate Southern solidarity and maybe Chandrababu Naidu can convince Telangana to come back to AP?

      • The talk of Dravida Nadu was there even before independence. it was resurrected by the poor policies of BJP/Modi. it came back in Kerala during the “beef ban”, Karnataka during Hindi imposition on metro and Andhra during the “special status” Modi can easily stop is going further by asking the finance commission to use 1971 census. When the Soviet Union fell, it split into multiple countries, not 2 countries. “Only a fool learns from his own mistakes. The wise man learns from the mistakes of others.”

  23. There are many policies in India that need to be looked back and reviewed, updated. Among other things, population control is very sensitive and serious. It was tried during emergency period and there was a backlash. Once bitten twice shy, no political party dare touch this issue and hence this issue will persist. Compulsory education to all Indians, till 12th class and including population growth lessons from 9th class onward, may have some positives.

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