Southern states may lose `20,000 crore in 5 years
AP, Karnataka to attend meet of southern states in Kerala
Southern states fear they will each lose `20,000 crore on an average in five years to Northern states if the NDA government’s terms of reference for the 15th Finance Commission come into force from 2020-21 to 2024-25 financial year.
The Centre has told the Finance Commission to take the 2011 Census as the basis for devolution of taxes from the Centre to the states, instead of the 1971 Census used earlier.
The population growth rate in southern states has come down since 1971 compared to northern states.
Southern states will get less than `5 for every `100 given by the Centre, while northern states such as UP will get `18, Bihar `10 and Madhya Pradesh `8.
Five southern states, namely, Karnataka, Kerala, Andhra Pradesh, Tamil Nadu and Telangana, have openly expressed their resentment at the Centre prescribing the 2011 Census as the benchmark.
The Telangana government has been seriously studying the impact of the 2011 Census and its finance department is preparing a report on how much of a loss TS would incur if the 2011 Census in considered.
Finance minister Etela Rajender said, “This is a matter of serious concern. We have no objection if the Centre gives incentives to northern states. But at the same time, it should ensure that south states are not de-incentivised. Any progressive state which is making rapid strides in all sectors and contributes to national development should not be discouraged by denying it its due share in Central funds.”
Southern states argue that states with low population growth are being penalised.
The north states witnessed a higher population growth of 39.5 per cent while southern states witnessed an increase of 21 per cent.
Southern states are uniting against Centre’s attempts to fund northern states at the expense of the south. The Kerala government has already called for a meeting of the southern states on April 10 for which AP and Karnataka have extended their support. There has been no official communication from Telangana and Tamil Nadu so far on attending this conference.
The Telangana government continues to flipflop on this issue ever since it had received invitation from the Kerala government to attend the meeting. Chief Minister K. Chandrasekhar Rao is learnt to have asked finance minister Etela Rajender to attend the conference first. But Mr Rao changed the stand all of a sudden while he was speaking in the Legislative Assembly last week.
“Already, reports of north-south divide are coming to the fore regarding devolution of taxes by the Centre. This is not good for the country or for national integration. I don’t support such arguments. But the Centre should think twice before formulating such policies,” Mr Rao said.
However, Mr Rao remained non-committal on Telangana attending the meeting called by Kerala. Finance department sources said that the Telangana CM might take a final call by April 8 or 9 on whether to attend the meet or not.
Mr Rajender has been asked to be available in the city till April 10 to fly to Kerala immediately in case the CM wants Telangana state government to attend the meeting.
AP finance minister Yanamala Ramakrishnudu has already confirmed his participation in the meeting.
“The southern states would stand to lose substantial percentage of their revenues, and at the same time the revenue share of the Centre increases if 2011 Census is taken as basis. Why the Centre didn’t discuss the issue with the state governments before finalising the terms of reference of the 15th Finance Commission?”Mr Ramakrishnudu asked.
“Taking unilateral decisions on such important issues is not proper on the part of the Central government. Going by the Central government’s attitude, it appears that it wants to bring pressure on the Finance Commission, which is an autonomous body, to help north Indian states. The Terms of Reference of the latest Finance Commission proves this point,” Mr Ramakrishnudu said.
Already, reports of north-south divide are coming to the fore regarding devolution of taxes by the Centre. This is not good for the country or for national integration. I don't support such arguments. But the Centre should think twice before formulating such policies. — K. CHANDRASEKHAR RAO