Karnataka Chief Minister Siddaramaiah plans to hold a conclave of Chief Ministers of Kerala, Tamil Nadu, Andhra Pradesh, Telangana, Maharashtra, Gujarat, Haryana, and Punjab regarding the ‘unfair devolution of taxes’ by the Union Government. It is his claim that ‘the states with higher GSDP per capita, like Karnataka and others, are being penalised for their economic performance, receiving disproportionately lower tax allocations’. According to him, ‘the Finance Commission needs to make a directional shift and create incentives for growth and better tax mobilisation’ in the spirit of fiscal federalism. He has alleged that ‘previous finance commissions have laid excessive emphasis on equity at the cost of efficiency and performance. As a result, states with higher GSDP per capita and higher contribution to the gross tax revenues of the union are progressively receiving lower shares of the central fiscal transfers’.
So, simply put, the states generating greater wealth should get a larger share and the nation’s earnings should not be diverted to poorer states or to the national poverty alleviation schemes applicable to all states. He does say that there is an urgent need to balance equity with efficiency and performance for a stronger union, both politically and economically. What that ‘balance’ would be will become clear if the conclave does come to be held.
Has Siddaramaiah forgotten which party he belongs to? The Congress under its newly rejuvenated avatar has put almost its entire political stake in the redistribution of wealth in proportion with the population pitch. This is mostly directed at ‘backward’ sections in the ‘poor’ states of the north. Is it the Karnataka CM’s claim that wealth should remain with the ‘deserving and meritorious’ instead of the more populous? Is he questioning the wisdom of the newly anointed ‘Leader of the Opposition’ in the Lok Sabha, Rahul Gandhi? Facing, as Siddaramaiah does, multiple allegations of involvement in various financial scams, does he feel that there are not enough government funds available to tap into for these purposes?
It must not be forgotten by the ‘prosperous’ states that the low wage migrant labourers from the ‘poor’ states are making it possible for them to profit from the ongoing enterprises, particularly in the construction and manufacturing sectors. States’ boundaries do not define the nature of India’s economic growth. Their interdependence is not only mutually beneficial, but also necessary. It is true that when the economy is on a growth path there is complacency and things are taken for granted. But politicians should make sure that the baby is not thrown out with the bathwater when raking up contentious issues just for the sake of votes.
