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Across the aisle: Southern flames may scald the nation

9 3 42

The Constitution of India obliges the President (ie the Central government) to appoint, every five years, a Finance Commission (Article 280). Its foremost duty is “to make recommendations to the President as to the distribution between the Union and the states of the net proceeds of taxes which are to be… divided between them… and the allocation between the states of the respective shares of such proceeds”. There are other duties, but they are not germane to the controversy dealt with in this essay. On the first part of the duty mentioned above (in italics), the states are together: they demand a greater share of the taxes from every Finance Commission (FC). As per the last FC (the Fourteenth), the states’ share was fixed as 42% . It is on the second part mentioned above — allocation between the states of the respective shares — that a controversy has erupted. Every state wants a larger share of the pie, but the total cannot exceed 100% (of the 42 %). It is also not possible to freeze the respective shares of the states because the objective conditions for allocation of the respective shares may, and would, have changed in five years. If a state’s share is reduced even by a fraction, the state is unhappy.........

© The Financial Express