oppn parties North-South Divide: Transfer From Tax Pool Needs New Method Of Calculation

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  • The Army conducts an operational alert exercise in eastern Ladakh
  • The IAF reopened the Vijaynagar advance landing ground, an airstrip in Arunachal Pradesh near the Chinese border
  • Amit Shah says he never sought to impose Hindi
  • Government bans the manufacture and sale of e-cigarettes in India
  • Mamata Banerjee seeks an appointment with Home Minister Amit Shah today
  • Bengal CM Mamata Banerjee meets PM Modi in what she later described as a government-to-government meeting
  • Supreme Court sets a deadline of October 18 for completing the hearings in the Ayodhya case
  • Pakistan rejects India's request for use of its airspace when PM Modi flies to the US later this week
  • Crude prices fall sharply as Saudi Arabia assures normal production in a few weeks. Prices fall by 5.4% to $65.30 per barrel
  • Sensex tumbles 700 points over fears that rising crude prices will deal a body blow to the tottering Indian economy
  • As Rajeev Kumar fails to appear before the CBI despite several notices, the agency forms a special team to locate and apprehend him
  • S Jaishankar says Pakistan is not a normal neighbour and its behaviour is a "set of aberrations"
  • External Affairs Minister S Jaishankar says PoK in Indian territory and the country hopes to have physical jurisdiction over it one day
  • Barasat Sessions court near Kolkata rejects Rajeev Kumar anticipatory bail application citing lack of jurisdiction as the reason
  • PM Modi celebrates his birthday with Narmada aarti and later has lunch with his mother.
Sunni Wakf Board and Nirvani Akhara write to the Supreme Court for a negotiated settlement to the Ayodhya dispute
oppn parties
North-South Divide: Transfer From Tax Pool Needs New Method Of Calculation

By Sunil Garodia

About the Author

Sunil Garodia Editor-in-Chief of indiacommentary.com. Current Affairs analyst and political commentator. Writes for a number of publications.
The anger of southern states on the possibility of getting reduced funds from the tax pool on account of their reduced population is understandable. Transfers from tax pool are made as per the size of the population of the state as the sole criterion. Southern states will get less this time because the Centre is upgrading the population records for tax transfer to the figures reflected in the 2011 Census. Earlier, the 1971 Census was being followed. Between 1971 and 2011, the population of states in south India has declined.

The Central government has a population control policy that these states have followed assiduously to check population growth, along with other parameters like increased literacy and education that has helped in controlling population. Hence, they should not be punished through lower transfer from the tax pool.

In order to do this, the government must scrap the old practice of allotting funds as per the population size of the state. There is no doubt that more money is needed to feed more mouths but this acts as an incentive for not reducing the population and is harmful to the nation. Instead, a basket of parameters should be made, with each item having a weight, in order to decide which state gets how much from the tax pool.

The basket must contain the size of the state, tax collected from that state, its population and population density, the state of healthcare and education and the literacy rate, among others. Weightage must be assigned to each item as per its importance. Once states realize that good governance brings more funds, there will be healthy competition to raise the bar. States like UP and Bihar, despite rampant corruption and misgovernance, continue to corner the lion’s share of the tax pool just because they have not done enough to reduce their population.

Shall we continue to reward those states that have performed badly? Or shall transfers from the tax pool be more equitable?