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Why is the South wary of 15th Finance Commission? -Tina Edwin

-The Hindu Business Line

Because they are wealthier and have a lower population than northern States

New Delhi:
The southern States are less dependent on transfers from the Centre than many of their northern peers, but a cut in transfers could leave their fiscal situation precariously poised and upset some of their expenditure plans.

That is exactly what they fear will happen when the 15th Finance Commission uses the 2011 population data — rather than the 1971 numbers — as the base to finalise a formula to share the taxes collected by the Centre. The previous Finance Commission had used 1971 data while giving some weightage to the 2011 numbers to capture the demographic changes.

Finance Commissions are obliged to ensure the poorer States have adequate resources to finance socioeconomic development and critical infrastructure, to ensure balanced regional development that’s inclusive and equitable. That would invariably mean higher transfers to the laggard States, sometimes at the expense of the more prosperous ones.

Therefore, the fears of southern States are not entirely misplaced. Their share in India’s population has declined by four percentage points between 1971 and 2011 while that of the economically laggard States of the North has correspondingly increased.

A strong emphasis on education and healthcare has helped Andhra Pradesh, Telangana, Tamil Nadu and Karnataka to slow population growth and speed up economic expansion.

That has translated into higher per capita income for people in these States — about twice that of people in States such Bihar, Madhya Pradesh, Rajasthan and Uttar Pradesh, commonly referred to as BIMARU States, and the three States created out of them in 2000.

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