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Daily CUrrent Affairs 22.06.2021 (Nobel laureate in economic advisory panel,

Daily CUrrent Affairs 22.06.2021 (Nobel laureate in economic advisory panel,

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1.Nobel laureate in economic advisory panel

At the same time, the people had high expectations of the government in terms of delivering on faster economic growth, social justice and equity through new programmes, projects and enhanced service delivery. “In this context, the government requires expert advice from the best economists available globally, who are familiar with Tamil Nadu, its economy, society and polity, and also the trends in the Indian and the global economy,” the G.O. said.

Providing guidance

The council would provide general guidance on economic and social policy, social justice and human development-related issues, especially matters related to ensuring equal opportunities for women and the well-being of under privileged groups.

It would also provide suggestions on boosting economic growth, employment and productivity and offer guidance on improving the overall fiscal health of the State. It would provide advice on improving the State’s capacity to deliver better services to the people; act as a “sounding board for new ideas” or on possible solutions to intransigent road blocks; and analyse and provide advice on any issue of economic and social policy referred to it by the Chief Minister or the Finance Minister.

The Finance Department would be the Secretariat of the Council and S. Krishnan, Additional Chief Secretary (Finance), would be its convener, the order said.

It is learnt that Finance Minister Palanivel Thiaga Rajan, an alumnus of MIT, played a role in getting Ms. Duflo to join the council.

‘Usher in growth’

Earlier, the Governor said the government would make all-out efforts to reverse the slow economic growth and usher in a period of rapid economic growth, taking full advantage of the available limited window of demographic dividend.

Mr. Purohit pointed out that there would be no social justice when there was high economic inequality and stratification. “Inclusive growth is thus the priority of this government. Growth and progress must benefit all of society and not just the top of the economic pyramid,” he said.

2.The state of India’s poor must be acknowledged

This is ‘abject poverty’, and if the economy is to be repaired, the number of the poor has to be meticulously counted

The son of a corn merchant-turned sociologist, Charles Booth had little patience for Charles Dickens and others in his time, who used lyrical prose to describe the desperation of the poor in working class London. Booth was also angry, in 1885, over the claims made by F.D. Hyndman, the leader of the Social Democratic Federation, which after an enquiry into the working classes of London had concluded that a quarter of the population of London lived in abject poverty (https://bit.ly/3gKVNi8). Confident of showing up the claims as sensational, he set about drawing his poverty map of the city and getting people to do door-to-door surveys. Much to his horror, his own landmark ‘Life and Labour of the People in London’ survey concluded that the numbers were much higher and a third of London lived in abject poverty. He had, unintentionally, nailed the importance of getting the numbers right, which settled the question of which class needed maximum attention.

An imperative

In India, there is now, rightly, a consensus difficult for the Government to beat down that to be able to battle COVID-19 and secure India from successive waves, the exact numbers of the dead must be carefully documented. Something else that needs equal attention, if the state of the decrepit Indian economy is to be repaired, is to be able to meticulously count the number of the poor and to prioritise them. The World Bank $2-a-day (poverty line) might be inadequate but it would be a start and higher than the last line proposed by the C. Rangarajan committee.

There has been hesitation for a variety of reasons to wrestle with the rising numbers of the poor in India. Not least, the pursuit of becoming ‘Vishwaguru’, has hampered this as that pitch works only if the leadership is able to mask the dramatic rise in poverty. Coming to terms with how low India’s median income is would disrupt the carefully constructed ride about being the biggest/largest in the world. A survey in 2013 had said India stood at 99 among 131 countries, and with a median income of $616 per annum, it was the lowest among BRICS and fell in the lower middle-income country bracket.

There has been a slide

Since then — and we are still not talking of the novel coronavirus pandemic — three important data points have made it clear that the state of India’s poor needs to be acknowledged if India is to be lifted. The first being, the fall in the monthly per capita consumption expenditure of 2017-18 for the first time since 1972-73, which the Government withheld citing concerns with the quality of data collected, then the fall of India in the Global Hunger Index to ‘serious hunger’ category and India’s own health census data or the recently concluded National Family Health Survey or NFHS-5, which had worrying markers of increased malnutrition, infant mortality and maternal health. A fourth statistic earlier this year, of Bangladesh bettering India’s average income statistics, must also be a reason for Indians to introspect. What kind of growth path has led to India sliding in the sustainable development goals index (by at least two ranks last month) as well as in the per capita income rankings? If we do not bother to know of the increased numbers sliding into poverty, there would be little possibility of moving toward a solution.

The precarious situation after the demonetisation in 2016 was rendered calamitous with the novel coronavirus pandemic and the shrinking of the economy. In 2019, the global Multidimensional Poverty Index reported that India lifted 271 million citizens out of poverty between 2006 and 2016. Since then, the International Monetary Fund, Hunger Watch, SWAN and several other surveys show a decided slide. In March, the Pew Research Center with the World Bank data estimated that ‘the number of poor in India, on the basis of an income of $2 per day or less in purchasing power parity, has more than doubled to 134 million from 60 million in just a year due to the pandemic-induced recession’. In 2020, India contributed 57.3% of the growth of the global poor. India contributed to 59.3% of the global middle class that slid into poverty. The last time that ‘India reported an increase in poverty was in the first 25 years after Independence, when from 1951 to 1974, the population of the poor increased from 47% to 56%’. So, India is again a “country of mass poverty” after 45 years. This has thrown a spanner in the so far uninterrupted battle against poverty since the 1970s. Urgent solutions are needed within, and the starting point of that would be only when we know how many are poor.

Poverty line debate

In India, the poverty line debate became very fraught in 2011, as the Suresh Tendulkar Committee report at a ‘line’ of ₹816 per capita per month for rural India and ₹1,000 per capita per month for urban India, calculated the poor at 25.7% of the population. The anger over the 2011 conclusions, led to the setting up of the C. Rangarajan Committee, which in 2014 estimated that the number of poor were 29.6%, based on persons spending below ₹47 a day in cities and ₹32 in villages.

Reasons why numbers count

Numbers matter for many reasons. The first is because knowing the numbers and making them public makes it possible to get public opinion to support massive and urgent cash transfers. The world outside India has moved onto propose high fiscal support, as economic rationale and not charity; it is debating a higher level of minimum wages than it has in the past. Spain has accorded security to its gig workers by giving delivery boys the status of workers. In India too, a dramatic reorientation would get support only once numbers are honestly laid out.

The second argument for recording the data is so that all policies can be honestly evaluated on the basis of whether they meet the needs of the majority. Is a policy such as bank write-offs of loans amounting to ₹1.53-lakh crore last year, which helped corporates overwhelmingly, beneficial to the vast majority? Or has it been just beneficial to a thin sliver of the super rich? This would be possible to transparently evaluate only when the numbers of the poor are known and established.

Third, if government data were to honestly account for the exact numbers of the poor, it may be more realistic to expect the public debate to be conducted on the concerns of the real majority and create a climate that demands accountability from public representatives.

Fourth, India has clocked a massive rise in the market capitalisation and the fortunes of the richest Indian corporates, whose wealth has grown manifold in the past few years, even as millions of Indians have experienced a massive tumble into poverty. The stories of billionaires get reported regularly and prominently. To say that the stock market and the Indian economy are ‘not related’ is ingenuous. Indians must have the right to question whether there is a connection and if the massive rise in riches is not coincidental, but at the back of the misery of millions of the poor, whose ranks are swelling. If billionaire lists are evaluated in detail and reported upon, the country cannot shy away from counting its poor.

See the ‘bread line’

The late Arjun Sengupta, as Chairman of the National Commission for Enterprises in the Unorganised Sector in 2004, had concluded that 836 million Indians still remained marginalised. He spoke of the poorest of poor and the commission’s recommendations on social security resulted in the enactment of the Unorganised Sector Workers Social Security Act (https://bit.ly/3vElOEl). At the time his conclusion was ignored — that 77% of India was marginalised — emphasising that it was a problem of a much bigger magnitude, than the figure of 25.7% conveyed.

The ‘bread line’ ostensibly owes its origins to the economic depression in the United States in the 1890s and charity by New York restaurants which organised soup kitchens. The queue or line of bread seekers would be distressingly long. A physical queue on the roads needed a policy response. It could not be wished away by simply looking away. The massive slide into poverty in India that is clear in domestic and international surveys and anecdotal evidence must meet with an institutional response. The Government must girdle up and unflinchingly quantify the slide from the ‘fastest growing economy’ to the country with the largest rise in the number of poor people. It must be accepted, to go back to the debate Charles Booth had with the Social Democratic Federation that it is “abject poverty” we are talking about; almost a sub-human level of existence of the majority of fellow Indians we cannot continue to be blasé about. Counting them would be a much-needed start to convey that each life matters.

Tendulkar Committee (2009)

  • Expert group constituted by the Planning Commission and, chaired by Suresh Tendulkar, was constituted to review methodology for poverty estimation and to address the following shortcomings of the previous methods:

Obsolete Consumption Pattern: Consumption patterns were linked to the 1973-74 poverty line baskets (PLBs) of goods and services, whereas there were significant changes in the consumption patterns of the poor since that time, which were not reflected in the poverty estimates.

  • Inflation Adjustment: There were issues with the adjustment of prices for inflation, both spatially (across regions) and temporally (across time).
    • Health and Education Expenditure: Earlier poverty lines assumed that health and education would be provided by the state and formulated poverty lines accordingly.

Recommendations

  • Shift from Calorie Consumption based Poverty Estimation: It based its calculations on the consumption of the items like cereal, pulses, milk, edible oil, non-vegetarian items, vegetables, fresh fruits, dry fruits, sugar, salt & spices, other food, intoxicants, fuel, clothing, footwear, education, medical (non-institutional and institutional), entertainment, personal & toilet goods.
    • Uniform Poverty line Basket: Unlike Alagh committee (which relied on separate PLB for rural and urban areas), Tendulkar Committee computed new poverty lines for rural and urban areas of each state based on the uniform poverty line basket and found that all India poverty line (2004-05) was:
      • ₹446.68 per capita per month in rural areas
      • ₹578.80 per capita per month in urban areas
    • Private Expenditure: Incorporation of private expenditure on health and education while estimating poverty.
    • Price Adjustment Procedure: The Committee also recommended a new method of updating poverty lines, adjusting for changes in prices and patterns of consumption (to correct spatial and temporal issues with price adjustment), using the consumption basket of people close to the poverty line.
    • Mixed Reference Period: The Committee recommended using Mixed Reference Period based estimates, as opposed to Uniform Reference Period based estimates that were used in earlier methods for estimating poverty.
    • Tendulkar committee computed poverty lines for 2004-05 at a level that was equivalent, in Purchasing Power Parity (PPP) terms to Rs 33 per day.
    • Purchasing Power Parity: The PPP model refers to a method used to work out the money that would be needed to purchase the same goods and services in two countries.

Rangarajan Committee

The committee was set up in the backdrop of national outrage over the Planning Commission’s suggested poverty line of ₹22 a day for rural areas.

  • Objectives
    To review international poverty estimation methods and indicate whether based on these, a particular method for empirical poverty estimation can be developed in India.
    • To recommend how these estimates of poverty can be linked to eligibility and entitlements under the various schemes of the Government of India.

Recommendations
Methodology Used: The Rangarajan committee estimation is based on an independent large survey of households by Center for Monitoring Indian Economy (CMIE).

  • It has also used different methodology wherein a household is considered poor if it is unable to save.
    • Normative and Behavioural level: Poverty line should be based on:
      Normative level of adequate nutrition: Ideal and desirable level of nutrition.
    • Behavioral determination of non-food expenses: What people use or consume as per general behavior.
    • Nutritional Requirement: For normative levels of adequate nutrition – average requirements of calories, proteins and fats based on Indian Council of Medical Research (ICMR) norms, differentiated by age, gender and activity for all-India rural and urban regions is considered:
      • Calories: 2090 kcal in urban areas and 2155 Kcal in rural areas.
      • Protein: For rural areas 48 gm and for urban areas 50 gm.
      • Fat: For urban areas 28 gm and for rural areas 26 gm.
      • Poverty Threshold: Persons spending below ₹47 a day in cities and₹32 in villages be considered poor.
      • Based on this methodology, Rangarajan committee estimated that the number of poor were 19% higher in rural areas and 41% more in urban areas than what was estimated using Tendulkar committee formula.
    • Modified Mixed reference period: Instead of Mixed reference Period (MRP) it recommended Modified Mixed Reference Period (MMRP) in which reference periods for different items were taken as:

      • 365-days for clothing, footwear, education, institutional medical care, and durable goods.
      • 7-days for edible oil, egg, fish and meat, vegetables, fruits, spices, beverages, refreshments, processed food, pan, tobacco and intoxicants
      • 30-days for the remaining food items, fuel and light, miscellaneous goods and services including non-institutional medical; rents and taxes.
  • Criticism: Rangarajan committee missed the opportunity to go beyond the expenditure-based poverty rates and examine the possibility of a wider multi-dimensional view of deprivation.

3.A perpetual war

U.S. should have backed Afghan govt. more instead of pushing hard to engage the Taliban

The dilemmas of ending the U.S.’s ‘forever war’ appeared to fall heavily upon the shoulders of President Joe Biden, who is now helming his country’s rush for the exit before the self-imposed deadline of September 11, 2021, the 20-year anniversary of the WTC terror attacks. While he clearly signalled his intention to remain engaged with the war-torn country by meeting, in the first instance, Afghanistan’s President, Ashraf Ghani, and Chairman of its High Council for National Reconciliation, Abdullah Abdullah, at the White House this week, the U.S.’s troop withdrawal since May 1, 2021, in a sense signals the opposite intention. There is no mistaking the Taliban’s reaction, especially to Washington’s plan to wind down its Afghan military presence. Ever since February 29, 2020, when the U.S. and the Taliban signed the Doha “agreement for bringing peace” to Afghanistan, Taliban-linked violence has risen steadily, U.S. intelligence reports have assessed that al-Qaeda still has a presence in Afghanistan and the terrorist outfit’s decades-long ties with the Taliban have been undiminished. Meanwhile the situation on the ground is far from inspiring for anyone who hopes for peace in the region. Facing tepid resistance from the ANDSF, now with ever-reducing access to U.S. air support, the Taliban have managed to fight, hold on to and even take back the territories from the government.

This reality begs the question of what new vortexes of violence, terrorist havens and other sources of regional instability Afghanistan might play host to now, and whether the U.S. and western powers will retain enough influence to prevent events in this regard from spiralling out of control. Closer to home, a sense of concern must be pervading South Block as the last U.S. troop carriers lift off from Bagram, potentially allowing agents linked to Pakistan’s military and intelligence establishment a freer hand to engage with extremist elements in Afghan with possible blowback for India. What will become of New Delhi’s long-sighted, soft-power investments into education, training and infrastructure and civil society development? Had the U.S. played a consistently strong hand supporting the Afghan government instead of pushing as hard as it did to engage the Taliban, that might have delayed Washington’s exit plans but provided more leeway for the ANDSF to push harder and take enough territory to weaken the Taliban’s overall strategic grip. Given the prospect of the ANDSF’s fragmentation — already occurring in some areas — it now appears more likely that a deal may be forged between the Taliban and powerbrokers once associated with the Afghan government. This could lead to a Taliban-centric religious council that sets an overall tenor of governance based on Islamic law yet permits a semi-autonomous executive governmental power to operate within that framework.

Recently, the U.S. signed a deal (at Qatar’s capital-Doha) with the Taliban that could pave the way towards a full withdrawal of foreign soldiers from Afghanistan over the next 14 months and represent a step towards ending the 18-year-war in Afghanistan. Along with this, a separate joint declaration was also signed between the Afghan government and the US at Kabul.

The peace deal is expected to kick-off two processes- a phased withdrawal of US troops and an ‘intra-Afghan’ dialogue. The deal is a fundamental step to deliver a comprehensive and permanent ceasefire and the future political roadmap for Afghanistan peace process and the Central region.

Background of the Deal

  • On 11 September 2001, terrorist attacks in America killed nearly 3,000 people. Osama Bin Laden, the head of Islamist terror group al-Qaeda, was quickly identified as the man responsible.
  • The Taliban, radical Islamists who ran Afghanistan at that time, protected Bin Laden, refused to hand him over. So, a month after 9/11, the US launched airstrikes against Afghanistan.
  • The US was joined by an international coalition and the Taliban were quickly removed from power. However, they turned into an insurgent force and continued deadly attacks, destabilising subsequent Afghan governments.
  • Since then, the US is fighting a war against the Taliban.
  • Donald Trump’s 2017 policy on Afghanistan, was based on breaking the military stalemate in Afghanistan by authorising an additional 5,000 soldiers, giving US forces a freer hand to go after the Taliban, putting Pakistan on notice, and strengthening Afghan capabilities.
  • However, the US realised that the Taliban insurgency could not be defeated as long as it enjoyed safe havens and secure sanctuaries in Pakistan, the US changed track and sought Pakistan’s help to get the Taliban to the negotiating table.
  • The negotiations began in September 2018 with the appointment of Ambassador Zalmay Khalilzad to initiate direct talks with the Taliban. After nine rounds of US-Taliban talks in Qatar, the two sides seemed close to an agreement.

Salient Features of the Deal

  • Troops Withdrawal: The US will draw down to 8,600 troops in 135 days and the NATO or coalition troop numbers will also be brought down, proportionately and simultaneously. And all troops will be out within 14 months.
  • Taliban Commitment: The main counter-terrorism commitment by the Taliban is that Taliban will not allow any of its members, other individuals or groups, including al-Qaeda, to use the soil of Afghanistan to threaten the security of the United States and its allies.
  • Sanctions Removal: UN sanctions on Taliban leaders to be removed by three months and US sanctions by August 27. The sanctions will be out before much progress is expected in the intra-Afghan dialogue.
  • Prisoner Release: The US-Taliban pact says up to 5,000 imprisoned Taliban and up to 1,000 prisoners from “the other side” held by Taliban “will be released” by March 10.

Challenges in the Deal

  • One-Sided Deal: The fundamental issue with the U.S.’s Taliban engagement is that it deliberately excluded the Afghan government because the Taliban do not see the government as legitimate rulers. Also, there is no reference to the Constitution, rule of law, democracy and elections in the deal.
    • Taliban is known for strict religious laws, banishing women from public life, shutting down schools and unleashing systemic discrimination on religious and ethnic minorities, has not made any promises on whether it would respect civil liberties or accept the Afghan Constitution.
    • Therefore, Shariat-based system (political system based on fundamental Islamic values) with the existing constitution is not easy.
  • Issues with Intra-Afgan Dialogue:
    • President Ashraf Ghani faces a political crisis following claims of fraud in his recent re-election.
    • The political tussle is between Ashraf Ghani (who belongs to the largest ethnic group in Afghanistan- the Pashtun) and Abdullah Abdullah (whose base is among his fellow Tajiks, the second largest group in Afghanistan).
    • If there are any concessions made by Mr Ghani’s government to the Taliban (predominantly Pashtun) will likely be interpreted by Mr Abdullah’s supporters as an intra-Pashtun deal reached at the cost of other ethnic groups, especially the Tajiks and the Uzbeks.
    • Consequently, these ethnic fissures may descend into open conflict and can start the next round of civil war.
  • Thus, the lifting of the US military footprint and the return of a unilateral Taliban could set the stage for the next round of civil war that has hobbled the nation since the late 1970s.
  • Problem with Prisoner’s Swap: The US-Taliban agreement and the joint declaration differ:
    • The US-Taliban pact says up to 5,000 imprisoned Taliban and up to 1,000 prisoners from “the other side” held by Taliban “will be released” by March 10.
    • However, the joint declaration lays down no numbers or deadlines for the prisoner’s swap. Afghanistan President held that there is no commitment to releasing 5,000 prisoners. He also held that such prisoners’ swap is not in the authority of the US, but in the authority of the Afghan government.
  • Also, the Taliban is fragmented or divided internally. It is composed of various regional and tribal groups acting semi-autonomously.
    • Therefore, it is possible that some of them may continue to engage in assaults on government troops and even American forces during the withdrawal process.
    • It is unclear if there is a date for the complete withdrawal of US troops or for concluding the intra-Afghan dialogue, or how long the truce will hold.

Impact of the Deal on Other Stakeholders

  • US: The promise to end America’s “endless wars” in the greater Middle East region was one of the central themes of US President Donald Trump’s election campaign in 2016. This deal may demonstrate progress on that front in his bid for re-election later this year.
    • Though, the US doesn’t recognise Taliban as a state under the name of Islamic Emirate of Afghanistan (key demand of Taliban), though many experts are of the view that this deal is a little more than a dressed-up U.S. surrender that will ultimately see the Taliban return to power.
  • Pakistan: The deal provides the strategic advantage to Pakistan, who is a long-time benefactor of the Taliban.
  • China: After the launch of the China-Pakistan Economic Corridor (CPEC), Pakistan is seen as more of a protectorate state of China. Thus, China may leverage Pakistan’s influence on the Taliban, to propel its strategic projects like the Belt and Road Initiative.

Impact of this Deal on India

This deal alters the balance of power in favour of the Taliban, which will have strategic, security and political implications for India. The deal may jeopardise thekey stakes of India in Afghanistan:

  • India has a major stake in the stability of Afghanistan. India has invested considerable resources in Afghanistan’s development.
  • India has a major stake in the continuation of the current Afghanistan government in power, which it considers a strategic asset vis-à-vis Pakistan.
    • An increased political and military role for the Taliban and the expansion of its territorial control should be of great concern to India since the Taliban is widely believed to be a protégé of Islamabad.
  • As Afghanistan is the gateway to Central Asia, the deal might dampen India’s interest in Central Asia.
  • Withdrawal of US troops could result in the breeding of the fertile ground for various anti-India terrorist outfits like Lashkar-e-Taiba or Jaish-e-Mohammed.

History of India-Taliban Relations

  • India and the Taliban share a bitter history.
    • IC-814 hijack in 1999 (India’s passenger plane was hijacked and taken to Kandahar in Afghanistan- under the control of Taliban) made India to release terrorists — including Maulana Masood Azhar who founded Jaish-e-Mohammed that went on to carry out terror attacks on Parliament (2001), in Pathankot (2016) and in Pulwama (2019).
    • Also, the Taliban perceived India as a hostile country, as India had supported the anti-Taliban force after the 9/11 attacks.
  • India never gave diplomatic and official recognition to the Taliban when it was in power during 1996-2001.
  • However, as the Taliban’s role in Afgan peace process becomes inevitable, India started to make some strides towards the Taliban.
    • Earlier, India was part of the Moscow-led talks with the Taliban in November 2018, which two former Indian diplomats attended as “non-official representatives”.
    • India is now moving to diplomatically engage with the Taliban. India’s presence at the agreement-signing ceremony is the first sign of a possible diplomatic opening.

4.Towards a more federal structure

If States directly collect more tax, they will become less dependent on the Central government

Preserving the unity of India was a great concern at the time of independence. The rulers of Travancore, Hyderabad, Jodhpur, Bhopal and Junagadh wanted their own separate countries. In October 1947, Kashmir was invaded with the backing of a very young Pakistan government. Goa was liberated from the Portuguese only in 1961. It was natural that India opted to be a Union unlike the U.S. and many other countries which have federal governments. The essential difference is that the Central government has more authority and power in a Union government.

Revenue distribution

Direct taxes are income tax and corporate tax. In the U.S., both the federal and State governments collect such taxes from individuals and corporations. This is true in Switzerland and some other countries as well. However, in India, direct taxes go entirely to the Central government. The Central government is supposed to distribute 41% of its gross tax revenues (reduced from 42% after the formation of new Union Territories in Jammu and Kashmir) to the State governments. In the U.S., the federal government distributes about 15% of its revenues.

State governments get funds from the Central government according to the Finance Commission’s recommendations. Though this is based on some formula, often politics intervenes and some States get less and some more. Usually the Central government does not meet the 41% target. We see various States either petitioning or coming into conflict with the Central government on this issue. Meanwhile, the Central government has added cess on various items which adds up to over ₹3.5 lakh crore. This is not shared with the State governments.

State governments also raise their own funds largely through taxes on liquor, property, road and vehicles. At an all-India level, the States get 26% of their total revenue from the Central government. Some of the so-called poorer States get up to 50% of their total revenue from the Central government, making them even more dependent. This gives more economic power to the Central government and allows ruling parties at the Centre to use these funds to their advantage.

Another issue is regional disparity. Maharashtra, Delhi and Karnataka contribute the lion’s share of taxes to the government. These three regions along with Tamil Nadu and Gujarat contribute 72% of the tax revenue. Uttar Pradesh, which has the largest population in India, contributes only 3.12% but gets over 17% of the revenue distributed by the Central government. Revenue distribution is based on complex considerations including population and poverty levels. For every ₹100 contributed, southern States get about 51% from the Central government, whereas Bihar gets about 200%. The population growth rates in the south have come down to near zero, whereas the population in central and north India continues to grow. The cross subsidy from the south to the north will therefore grow. Meanwhile, job seekers and those looking for higher quality education are flocking to the south.

On the other hand, political power is concentrated in the north because there are more Lok Sabha seats. The number of seats in each State will be revised in 2026 perhaps based on population and other factors. This has already created apprehension in the southern States that they will be further politically marginalised. The periodic attempts to declare Hindi a national language fuels widespread resentment.

Beyond the current framework

Some experts support cross subsidy and others oppose it. Suggestions usually work within the current framework. Making the fund allocation fairer is almost impossible because of politics. We need to look beyond this framework. One step could be to provide greater economic power to the States so that they can directly collect more taxes and be less dependent on the Central government. This would improve Centre-State relations. For poorer States, a period of transition is perhaps required.

Unfortunately, politics does not depend on expert opinion. On top of an extended pandemic, negative economic growth and loss of crores of jobs, the situation is becoming ripe for rabble-rousing politicians to ask why we should subsidise those people who disrespect our language and do not give us political power. Regional differences led to violence in Yugoslavia, Sri Lanka and between East and West Pakistan. Hopefully, we may not see that kind of violence.

India’s hard-won independence and unity needs to be preserved. Today there are threats from China. There may be threats from Afghanistan after the U.S. withdraws its troops. A transition to a more federal structure will allow the Centre to focus on external threats instead of internal dissensions. Our internal divisions helped invaders from West Asia and the British. Hopefully, we will learn from our history.

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