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RamaSiddhu J

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The 15th Finance Commission May Split Open Demographic Fault Lines Between South and North India

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It is becoming almost untenable for Tamil Nadu and Kerala to thrive in the Indian union as rational, self-interested sub-units.

The 15th Finance Commission chairman N.K. Singh. Credit: PTI

The 15th Finance Commission chairman N.K. Singh. Credit: Twitter

The 15th Finance Commission was constituted late last year under the chairmanship of N.K. Singh. The finance commission’s most telling role, as readers may recall, is to come up with the ratio in which the tax money that the central government raises gets divided among the states. This is ordinarily a boring task that few people are interested in.

In the case of the 15th Finance Commission, however, the stakes are so high that the future of the Indian union may well unravel based on its decisions.

The commission recently released a public notice in all newspapers, seeking suggestions from individuals and organisations. This was done with such little fanfare and in fonts so tiny that it made one wonder if those who sought it wanted no one to take notice. Buried in that notice was the reason, namely, a statement from the terms of reference that read: ‘the Commission shall use the population data of 2011 while making its recommendations’.

The decision to use Census 2011 entirely as the basis for population data is possibly the most important and consequential political event of our generation. The previous commission, the 14th Finance Commission, introduced that idea in a small way for the first time. It gave a weightage of 10% for Census 2011 data and even that hurt states like Tamil Nadu badly.

Until the 13th Finance Commission, the practice was to use 1971 Census data entirely, which was the last census before aggressive family planning initiatives were implemented. The 1971 data is also the basis for distribution of Lok Sabha seats, for instance.

The political consensus that ran this country was: we cannot arrive at ratios of distribution based on current population after asking states to aggressively implement family planning and control population.

It was a fair compromise to freeze allocation ratios – be it for number of MPs from each state or for allocating tax money  – given not doing so would punish success and be counter productive.

Between 1971 and 2011, Kerala and Tamil Nadu had an absolute growth in population of 56% and 75% respectively; the lowest among all states. That is understandable given their fertility rates have dropped to below replacement levels for a generation. Most other states had an absolute growth in excess of 100%. The data on the population baseline data in this 30-year period is eye opening.

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