What should be the demands from the southern Finance Ministers’ meeting? A draft charter

States must reiterate to the Centre where its homework assignment stops. “Thus far and no further.”
What should be the demands from the southern Finance Ministers’ meeting? A draft charter
What should be the demands from the southern Finance Ministers’ meeting? A draft charter

The Terms of Reference of the 15th Finance Commission have evoked strong protests from leaders of the southern states. They realise that they are subject to dipping central resource allocations due to their relative economic and social well being.

Southern states with their better per capita incomes, lower fertility rates, increased education levels and health outcomes, are complaining due to penalties in fiscal distribution, but that is not their only complaint. Delhi high handedness interferes with their political empowerment and social equity.

Karnataka, a state that is among the top tax contributors to the union, has been left waiting on the demand for a state flag – as if being of Karnataka and of India is an either-or existence!  Tamil Nadu, with its unparalleled 44% female enrolment in colleges, is under siege for opposing NEET as the criteria for state-funded medical colleges that produce doctors to serve in Sivagangai and Ariyalur! Andhra Pradesh is reeling from central betrayal on Special Category Status, while the most socially developed Kerala, is being dictated its menu like a juvenile.

Kerala Finance Minister Thomas Isaac has called for a meeting of his peers from the southern states on April 10.

So when the leaders of the south meet as a collective, what should they demand?

Here is a charter of demands which could be the foundation for the Southern Collective in their arbitrations with the Centre. These demands must be framed not from a position of superiority or victimhood. They must be framed from the recognition that a massive development effort is still pending in the south, even as it finds itself ahead of the average Indian curve.

The objective of this charter then, is to delineate the functions of the collective, not exhaustively but as a draft that evolves. All of the agenda cannot be accomplished on day one, nor is it meant to be. However, it does put the wheels in motion in a federal direction, and sets up a framework to leapfrog development in the face of asymmetry.

Charter for the Southern Collective (Draft)

Credo: Federalism at the Centre, autonomy for the states.

1. Political Representation

The Rajya Sabha must be treated as a genuine Council of States. A minimum number of seats from each state must be guaranteed for in-state representatives and untied to population, and then it can have a multiplier for population. Today, it is a dole for good behaviour, graceful retirement and seats are donated to non-state representatives. This defeats the strength of the state lobby in Parliament.

2026 is coming, and delimitation will be revisited for alignment with a more current census than 1971. It is conditional upon India achieving population stability, and this is quite likely, with the total fertility rate (TFR) of the most populous BIMARU states showing a trajectory of decline. This is both good news and bad news for the south.

The good news is that this is likely to uncap the ridiculously low ceiling on the total number of seats in both Houses of the Parliament, frozen now for decades, and the total number of seats may increase or even double. India is hugely under-represented compared to other democracies and this means more representatives serving the people. A good thing.

The bad news is that the south stabilised its fertility levels around 2000-2005, two decades ahead of some of the most populous states in the Hindi belt. So its population is a fraction of those states, unlike in 1971 when it was quite comparable. This implies a dramatic fall in proportion of southern seats in the State Assemblies and the Lok Sabha.

This is a penalty for better governance, education attainments, health outcomes and gender parity, these being the pivotal factors for fertility rates to stabilise.

State Assembly and Lok Sabha seats are directly correlated to population, and cannot be manipulated to avoid a south-side blow. A Southern Collective must instead,

1. deliberate on how to ameliorate this;

2. push for increased Rajya Sabha representation; and,

3. pressure for increased South Indian elected representatives in Union Cabinets ongoing.

Given development directions and decisions have led to improved outcomes in the South, this should be a natural choice. Plus, India can benefit from these positive experiences.

2. Electoral Rights

No simultaneous elections. States must keep their time tables.

Parties with regional focus err in the interest of their state. National parties can always throw a given state under the bus for their electoral compulsions, but state parties have no choice except to cater to voters in the state. State parties are thus the only ones with the sole goal of growing the state and its people.

State and central elections with the same timetable reduces primacy of state-level issues, state political leaders and local parties. It muddles voter focus on local issues and paves the way for a more unitary government. As a collective, they must propose moving towards electoral practices that can be customised per state, like voter enrolment, direct election of Chief Minister, or NRI voting. State elections can be run by states themselves with oversight by GoI to ensure compliance to the principle of free and fair elections.

3. Economic Charter

Review the 15th Finance Commission Terms of Reference, and issue recommendations to minimise the Deccan penalty.

  • Weightage for the 2011 census in the calculation must be decreased. Propose use of annual statistics for migration and increased weightage for in-migration in fiscal devolution. Use state human development indices as reward.
  • 42% devolution recommended by the 14th Finance Commission must not be reduced.
  • Centrally sponsored schemes must go. Commensurate funds must be devolved across states, not Centre.
  • Revenue deficit compensation as per Constitution must continue, not to be tampered.

States must be rewarded, not punished, for economic progress that leads to better HDI. Instruments to increase revenues and jobs must be in states' hands, not centralised.

Terms of Reference issued to the 15th Finance Commission may increase weightage of the 2011 population census. This is one of the parameters that decides how to divide funds between states. There has been a hue and cry about this due to the resulting heavy penalty on the southern states with their low fertility rates. This concern is real.

It is also true that some central transfers are proportional to the number of people needing public services, and it is also fallacious to stick entirely to a dated 1971 census eternally.

That said, the south will suffer from drastically reduced funds, and hence an acceptable weightage must be negotiated to be fair and equitable. Southern states are net receivers of migrants due to job opportunities. The collective could counter some of it by asking for increasing weightage to migrations into states. In addition, better human development indices should be rewarded with more devolution to promote such policies and programs.

The ToR also proposes that the Finance Commission relook at whether as much as 42% should go to the states. The Centre should not be allowed to claw this back and the Southern Collective must oppose this vigorously. Existing revenues must be protected, and increased, for states to grow, not vice versa.

Another red flag is that it rewards states to propagate centrally sponsored schemes. Each state's needs are distinct, best assessed by the state, and citizen services are almost entirely delivered by state governments. Central schemes, distant from local realities, not only encourage states to direct sparse resources to lesser or perhaps nonexistent problems but also distracts from addressing graver matters. Why should a Smart City or Digital India take precedence over the tragedies that befall the children in the public hospitals of UP?

Centrally sponsored schemes must be scrapped and residual funds must not get diverted into the union kitty. Further, revenue deficit grants that are constitutionally enshrined to make up for basic development needs of people that the state is unable to resource, must also be protected.

4. States' Rights

We must divest subjects from concurrent lists to state list. State administrative services must take primacy.

Inherent diversity calls for balance of power between states and Centre. States must be supreme in internal matters, preserving the spirit of the federal constitution. Review any GoI proposed policies leading to centralisation, prevent arbitrary anointing of powers to GoI. States should serve as federal watch dogs.

The Southern Collective must refute any central interference in state matters like examinations, language, food, socio-cultural mores and customs. It must assert a clean separation of powers between the Centre and state, via separate subject lists. This makes accountability for delivery of each service crystal clear, benefitting citizens.

Take the example of education, where enormous resources from infrastructure to teacher salaries are spent by states for creating knowledge and skills for doctors, engineers, bankers and social scientists across the cities, towns and villages of the states. Yet, the Centre dictates what the admission criteria must be? Or sets co-operative bank examinations in Hindi or English for a banker who serves the hinterlands of Karnataka? This is how education and socio-economic needs get disjointed and attainments sink even while enrolments and literacy levels rise.

All public services that are of consequence to daily lives of citizens are delivered by the states not the Centre. Also, many administrative issues are complex and require domain expertise - improving ports, or agricultural productivity or public health. Even law and order. And yet India's bureaucracy is centrally controlled and rotated relentlessly.

Administration efficiencies of states can be ignited via a power-packed state civil services. The collective must recommend to reduce power and  jurisdiction of All India Services; the best talent should be deployed in states where most of India's administration needs exist. Building of domain expertise of administrators must be prioritised to match each state's distinct needs. Ditto for law and order and the police service. No cadre, or controlling authority must exist at all India level.

5. Cultural diversity

States must argue for a non-negotiable two-language policy of state language plus English.  English to be the only link language across India. There must be no discrimination against non Hindi speakers, no privilege for Hindi in any union funding or public services. The unique and ancient southern heritage must be explored and preserved.

On the socio-cultural front, a centralised approach could undermine uniquely southern cultural elements. Languages, local mores, customs and food habits. For instance, imagine the hegemony that overrules Tamil Nadu's demand to use Tamil in the Madras High Court, in addition to English and Hindi, so that defendants and witnesses get a clue of the proceedings!

The fact is that the southern states share a common ancient Dravidian cultural and linguistic history, and they are the only ones that can preserve, enhance and celebrate it.

The Southern Collective must ensure that:

  • All articles privileging Hindi in the constitution are eliminated.
  • All public services are available in local languages. Nationalised banking, courts, roads, transport signage, application forms etc.
  • National jobs, army to have English and all Indian languages over time.

‘Thus far and no further’

In democracy, demography is economic and political currency, and asymmetric development is a double edged sword.

Central government approach and policy needs to encourage socio-economic attainments, rewarding growth states that not only achieve higher GDP by creating jobs but also translate that into improved human development indicators (HDIs.)

That – empowering states to realise their potential – along with its own responsibilities of defence, foreign affairs, common currency, nationwide market and some physical infrastructure, is where the homework assignment of the Centre stops. Thus far and no further.

Local issues addressed at local levels makes people more responsible for their votes. They reap what they sow; that connection is self evident to them. It also transfers accountability to the lowest and most local level, forcing outcomes to improve. Similarly, when local development is enabled through locally generated revenues, it makes governments more fiscally responsible, as opposed to looking to remote financing.

Indeed much of the Charter of the Southern Collective, is simply federalism at the Centre, autonomy for the states. Some of it could well apply to all of India. Unfortunately, the states of the Hindi belt may not champion these due to their extraordinary dependence on the Centre, and the politics of those states.

This charter is not only an abstract governance structure, it attempts to harmonise the diversity in governance required for the many-hued union of states that is India.

This charter is but a beginning; if adopted, refined and implemented, it can make India a more robust and mature federal democracy that is truly "of" the people.

The author is a civic activist and political commentator. 

Views expressed are the author's own.

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