THE CONTEXT: There are concerns regarding the potential danger of political disenfranchisement in the South when the delimitation freeze ends in 2026 and the tussle over the distribution of Central taxes as well.
ISSUES ARISING:
- The decline in the share of resources: There is a drastic decline in the share of resources distributed to the South, and it is contented that the devolution of funds by the finance commission work against the Southern states. Inter-State distribution is based on two factors: State’s share in the total population and the income distance ratio. On both these counts, the south loses out. For example, in the case of Kerala, it was 3.8% during the 10th Finance Commission, now, it is 1.9%.
- Issue of unspent cash: Despite government relaxing the borrowing limits for States, there is a strange issue of unspent cash balances. Fiscal Responsibility and Budget Management (FRBM) Act is structured as such that states don’t want to spend money on revenue expenditure and poorer States were the biggest depositories of these funds.
- Delimitation issue: There is rising issue related to delimitation as it can lead to shift in political power balance within the federal polity. Article 81 of the Constitution says that each State should have seats in proportion to the population and that constituencies should roughly have the same population. The delimitation of constituencies would lead to a decline in their representation in Parliament. This is a serious issue and it can have devastating consequences, marginalising the southern States in the political sphere.
THE WAY FORWARD
- No penalisation: The States which have successfully implemented the national policies cannot be penalised for their success. There is a need to identify the points where intervention is required so that the union does not tilt towards an unbalanced and disastrous course of development or move in a direction which could lead to fragmentation.
- Ensure Equity: Inter-state transfers would have to have a component of equity. The richer States and regions, though have to contribute to the development of the States which are backward, but the redistributive transfers must be within a certain limit. The equity principle has to be kept in the calculation in the sense that there is a certain number of cross transfers and redistribution across the federal polity.
- Devolution of sources: The terms of reference of the 16th Finance Commission are due soon and it is the time that a voice is raised for involving the States. There should be a strong effort to ensure that the next Finance Commission has terms of reference which take cognisance of the problems that the federal policy is facing. For example, if the population basis is being shifted from 1971 to a new figure, the weightage of the population can be adjusted. States must get a space and voice in the decision-making of federal finance.
- Reasonable distribution of seats: There is a need of reasonable distribution of seats by increasing the total number of seats in the parliament to ensure adequate representation of the states.
THE CONCLUSION:
After the proposed delimitation there may be inequitable distribution of seats which will not be in favour of southern states. Thus, there is a need for effective distribution of seats and equitable distribution of funds among all the states instead for a federal balance.
PREVIOUS YEAR QUESTIONS
Q.1 Discuss the main objectives of Population Education and point out the measures to achieve them in India in detail. (2021)
Q.2 How far do you think cooperation, competition and confrontation have shaped the nature of federation in India? Cite some recent examples to validate your answer. (2020)
MAINS PRACTICE QUESTION
Q. The upcoming delimitation exercise has raised concerns about the unequal representation of states in the Lok Sabha. What impacts can it have on the federal relations of the country?
Please refer to MAINS FOCUS article for more: https://blog.lukmaanias.com/2023/10/06/retribution-for-the-south-accolade-for-the-north/
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