Deputy Chief Minister Mallu Bhatti Vikramarka has stressed the need for recalibrating the balance of power between the Central Government and the States to ensure a true federal system.
He said that there was a need to increase States’ share in Central taxes from 41 to 50% and States should resist the Centre’s increasing use of cesses and surcharges. Reducing Centrally-sponsored schemes and allowing States to spend on their local priorities, protecting the political representation of southern states in the delimitation process and granting greater autonomy in borrowing for fiscally-prudent States, were among other issues he flagged during a conference on Finance held in Kerala on Thursday.
He explained that the demands were not just about technical adjustments but were about justice, equity and future of the country’s federalism. “We must ensure that States have the resources and autonomy needed to chart their own development path, fulfilling the vision of our Constitution’s framers,” he said.
Recalling that federalism was a basic feature of the Constitution, he lamented that the Centre’s failure to uphold these principles was hindering development of States, undermining the federal structure and creating a sense of equity. In this context, he said the XIV Finance Commission’s decision to increase the States’ share in Central taxes from 32 to 42% was misleading.
It merely shifted funds from tied grants to united ones, not a genuine increase in resources. “The Centre’s growing reliance on cesses and surcharges not shared with States had soared to over 28% of the Centre’s gross tax revenue. This trend significantly diminished the resources available to the States. Cesses and surcharges have become permanently temporary and create an impression that they are primarily intended to deny States their due share,” he said.
Coupled with this was delays in the release of GST compensation which further strained the states’ finances hindering their ability to plan and execute budgets effectively. This was creating uncertainty and was hampering development initiatives. The southern States for instance, despite their significant contribution to the GDP in excess of 30% and representing a considerable portion of the population had seen their share in tax devolution decline from 21.07% of the XI Finance Commission to just 15.8% under the XV Finance Commission.
This trend was unjust and was creating a sense of unfairness among the States that had prioritised sustainable development and demographic discipline. In addition to the uncertainty on the financial side, delimitation was the looming political threat for the southern States. The upcoming delimitation exercise based on 2011 population census was expected to reduce southern states’ political representation in the Lok Sabha.
This threatened to marginalise southern states and undermine their political voice in national decision-making. States that had prioritised population control and social development could be unfairly penalised while those with higher population growth might gain disproportionate representation.
Published – September 12, 2024 07:01 pm IST
