India is diverse not only in terms of its history and culture but also when it comes to its geography, demography, wealth of resources and state of economic progress
It is not uncommon for the state governments, especially run by Opposition parties, to cry for more after the Union finance minister presented the Budget in the Lok Sabha. But the statements of four chief ministers from the south, obviously from the INDIA bloc parties, were shriller this time around. While Tamil Nadu chief minister M.K. Stalin rued that his state’s name was never mentioned in the budget, Telangana chief minister A. Revanth Reddy commented that the Budget betrayed his state. Kerala chief minister Pinarayi Vijayan objected to his state “being penalised for the progress it has made” and Karnataka chief minister Siddaramaiah regretted that all his state got in the Budget was an empty vessel. Similar statements came from chief ministers of other non-BJP ruled states, too.
What triggered the elected chief ministers’ ire was not just that their states got precious nothing in terms of funding despite presenting to the Union government specific need-based demands, but the discriminatory treatment of the BJP-led government towards them vis-à-vis others. And their grief merits a hearing.
India is diverse not only in terms of its history and culture but also when it comes to its geography, demography, wealth of resources and state of economic progress. Though India that is Bharat is a union of states, the Union government has come to wield disproportionate financial power compared to the states, somewhat by constitutional design and otherwise by precedent and encroachment.
It was originally envisaged that there will be a central pool of taxes which the Union government would share with the states according to a formula. Instead of vesting the responsibility of devising the formula with the Union government, which is the custodian of the Consolidated Fund of India, the Constitution framers formed a body called the Finance Commission.
As per Article 280 of the Constitution, it shall be the duty of the Finance Commission to make recommendations to the President as to, inter alia, the distribution between the Union and the states of the net proceeds of taxes which are to be, or may be, divided between them, the allocation between the states of the respective shares of such proceeds, and the principles which should govern the grants-in-aid of the revenues of the states out of the Consolidated Fund of India. The Finance Commission’s formula would factor in the ability of the states to raise their resources to meet their development needs, which vary from state to state. In short, we have a constitutional mechanism to help weaker states catch up with the rest.
The Union government’s transfer of resources to the states comes in the form of Central schemes and special grants, too. The Planning Commission was an institution which acted as a resource centre to advise the Union government on such schemes and programmes.
One of the first actions of the first edition of the NDA government was to dismantle the Planning Commission and replace it with a Niti Aayog with no mandate of such advisory powers. The net result is that Union government can act completely arbitrarily when it comes to the allocation of funds to the states’ programmes.
No chief minister would have an argument that weaker states should not be given a larger share of the revenue pie so that India progresses as a nation and takes everyone along. But to weaponise the financial resources and use them against states ruled by political opponents, as the present Central dispensation is being accused of doing, would be to undermine not just the federal principles of the Constitution but fairness itself. It is best avoided.
