manlion
SENIOR MEMBER
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Having established our place firmly in the union, let me raise certain issues of federalism that affect us on a day to day basis. Relatively well-developed states like Karnataka, Kerala, Tamil Nadu, Andhra Pradesh and Maharashtra contribute more to central taxes than what they get in return from the center. What we get from the center comes in the form of state’s share in devolution of central taxes and grants under centrally sponsored schemes. The grants under centrally sponsored schemes come with strings attached. Schemes are designed keeping the entire country in mind and we are forced to implement them and provide our share. We need a system where states receive larger portion of the taxes collected from our states and the share of centrally sponsored schemes must go down. The central schemes, if at all needed, need to be flexible so that we can tailor them to our needs.
Historically, the South has been subsidizing the north. Six states south of the Vindhyas contribute more taxes and get less. For example, for every one rupee of tax contributed by Uttar Pradesh that state receives rupee 1.79. For every one rupee of tax contributed by Karnataka, the state receives 0.47 rupee. While I recognize the need for correcting regional imbalances, where is the reward for development? The states of the South have nearly reached replacement levels of population growth. Yet, population is a prominent criteria for devolution of central taxes. For how long can we keep incentivizing population growth?
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