Kejriwal & Mann Join Kerala CM's Stir Over Funds Distribution

In response to India’s budget presented recently, on 8 Feb the Kerala CM led a protest in New Delhi against the discrimination in federal funds distribution by the Narendra Modi government. Delhi CM Arvind Kejriwal and Panjab CM Bhagwant Mann joined their Kerala counterpart Pinarayi Vijayan. The Kerala government's agitation against the Indian government comes at a time when Karnataka and Tamil Nadu, two of its neighboring states, have also raised similar allegations against the Modi government. A Wint Investment graphic on uneven wealth distribution shows out of every ₹100 that states contribute as taxes, how much each state gets back. Karnataka gets ₹13.9, Maharashtra ₹7.7, Bihar ₹922.5, Arunachal Pradesh ₹4,863.7, and Panjab 72.9. The southern states allege discrimination against them. This is an issue of fiscal federalism. According to Article 28 (3) of the Indian Constitution, the Finance Commission (FC) of India decides the tax sharing formula. The union government decides the FC’s Terms of Reference. Until 2010, the formula was based on the 1971 Census. The 14^th FC assigned 17.5% weight to the 1971 Census and 10% weight to the 2011 Census. The 15^th FC whose term began in 2017 looked at only the 2011 Census data. Hence, northern states have not implemented population control benefits from taxes from southern states. Finance Minister Nirmala Sitharaman tried placing the blame on the 15^th FC, omitting that they work according to the Union ministry’s Terms of Reference. Southern states say they are being penalized for controlling their population and having better development indices.