POV: A SOUTHERN REVOLT
Since the Terms of Reference (ToR) for the Fifteenth Finance Commission (FFC) were published, a revolt has been brewing in southern states. Andhra Pradesh, Kerala, Karnataka and Tamil Nadu have been protesting separately, and to some extent together, against potential changes to the basis on which central taxes are allocated across states which could disadvantage richer southern states vis-àvis poorer and more populous northern states.
The clause in the (ToR) that has received the most attention is one which directs the Finance Commission to use population data from the 2011, not 1971, census when making recommendations on the allocation of tax revenues among states. This will replace a compromise in place since 1976 that sought to incentivise states to bring their population growth under control.
Since the publication of the ToR, Andhra Pradesh chief minister Chandrababu Naidu has stormed out of the NDA. Naidu has argued that the Centre routinely diverts tax revenue collected in the south to spend on the development of northern states. Under pressure from opposition parties in the state, he has protested against the refusal of the central government to honour an earlier agreement for a special fiscal status as part of the compensation bargain struck when Andhra Pradesh was bifurcated to create Telangana.
Earlier in April, Kerala hosted a meeting of the finance ministers of Andhra Pradesh, Kerala, Karnataka and Puducherry, declaring that the ToR violated the principles of federalism. In March, Karnataka chief minister Siddaramaiah fired a salvo over Facebook calling for southern states to be better rewarded for development. Adding to the sense that these leaders have identified a common cause, M.K. Stalin, working president of the opposition DMK in Tamil Nadu, wrote to the chief ministers of 10 non-BJP ruled states asking them to join him in demanding modifications to the ToRs in consultation with all states.
This southern backlash raises the possibility that, come 2019, it may become harder for the BJP to make inroads in the last stretches of southern India which have so far remained most reluctant to fall for the party in state elections.
Centre-state relations, and a defence of state autonomy against the Centre, are indeed likely subjects around which an anti-BJP coalition might take shape. A similar thing happened against the Congress party in the 1980s.
Yet new tensions around redistribution within the federation could complicate the prospects of a national anti-BJP alliance forming, especially one that brings together the non-BJP opposition in northern states with non-BJP ruling parties in the south. By initiating a debate about equity and fair treatment among states that disrupts the status quo, the central government may have made it more difficult for parties to build cross-state alliances.
Centre-state relations could instead be viewed from the vantage of each state rather than as a pan-India question. In Andhra, opposition parties and the TDP are already competing with each other to demand special category status for the state. Naidu last week declared that “TDP will be the only party that could dictate terms to the Centre in future” and called on voters to make the party a ‘kingmaker’ again.
The noisy politics of a north-south divide could also distract public attention from wider issues related to Centre-state relations that affect all states, and that the Finance Commission has also been asked to consider. These include questions of whether the last Finance Commission was right to substantially enhance tax devolution to the states because of its impact on the central government’s ability to fund its development priorities. They also include the prospect of using criteria such as the effective implementation of central government flagship schemes or control of expenditure on ‘populist’ measures (presumably expenditure on state policies or schemes) as performance-based incentives for determining the share of fiscal transfers received by individual states from the Centre. These measures would reduce the fiscal autonomy of all states—something that the last Finance Commission had moved to enhance.
Louise Tillin is Senior Lecturer in Politics at the India Institute, King’s College, London
This southern backlash raises the possibility that, come 2019, it may be harder for the BJP to make inroads in the last stretches of south India