“BiMaRUnomics” Examined
Readers may remember a series of posts (links below) I had published last year (against the backdrop of violence against North Indians in Maharashtra) examining state-wise GDP and contributions to the central exchequer in India.
In those posts, I had raised some questions around the fiscal imbalance and deficits of various states, their GDPs, their representation in Parliament etc.
A few weeks ago, I discovered these two excellent sources of reference which can be useful in further exploring the issues I had raised:
a] Gross State Domestic Product at current prices (Feb 2008)
b] Various Annexures from the 12th Finance Comission Report here and here [ pdf files ]
Do have a look and please share your thoughts on these questions that come to mind:
- What are the implications of all these for the federal structure in India?
- If this data gets wide-spread coverage, is it likely to strengthen or weaken our federal structure?
- Can we continue to have a development policy and plan that is “needs-based”?
- Or is this likely to be (always?) challenged by states that feel they are not getting their fair share?
- Will we see further tensions amongst the states as development trajectories move further apart?
- In particular, will relatively developed states like Maharashtra demand higher number of representatives in Lok Sabha?
- Does it make sense to increase central tax revenues to help even out the marked regional imbalances that are currently seen?
- What do you feel about increasing the share of States in central tax revenues? (the latest demand comes from Rajasthan whose CM said that the states’ share should be determined on the basis of the geographical area and per capita income)
Comments, thoughts welcome.
Also in this series:
Alaskonomics and Bihar – Part I
“Maharashtranomics†and Bihar (Part II of Alaskonomics)
“Maharashtranomics†and Bihar – Part II
Related Post: The forgotten “J†in J&K
P.S. As an aside, for some very interesting (and well presented) data from the last Census, check this link
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I agree this is a very valid point, one that needs stating clearly first. We need more information to measure the extent of the transfer. We are missing the numbers for total receipts accruing to the central treasury from the various states (Income tax etc). These along with numbers for state generated receipts and total expenditure will explain the extent of transfers.
Then there are other numbers to consider – losses of public sector undertakings, which are run, at least nominally, with a for-profit motive. Don’t these also count here. Losses made by a PSU steel plant say in Andhra Pradesh, amounts to transfer of wealth to the state. Here apportioning the blame may be a more contentious matter. But generating ballpark numbers will be important to size up the problem more accurately.
Now lets consider the fallouts of this trend. Do we agree on the principle of rights and responsibilities go hand in hand i.e. right of self-governance comes with taking fiscal responsibility for oneself. Pursuing that logic further, a bankrupt state government hands over its financial ministry to whoever is bankrolling it i.e. the Central Government or more specifically by the states making positive contributions to the central kitty. Just to provoke, just like in business, financial mismanagement could be grounds for dismissal of state governments.
….just like in business, financial mismanagement could be grounds for dismissal of state governments……
absolutely. Otherwise where is the accountability and ultimately who bears the burden and what for? pl read this article – India’s palaces of the untouchables
Courtesy Nikhil Narayanan (via Twitter): A comparison between UP and TN