What's New

‘NORTH VS SOUTH DEBATE ONLY SERVES LOCAL POLITICS’

Relevance: GS 2 – Functions and responsibilities of the Union and the States, issues and challenges pertaining to the federal structure, devolution of powers and finances up to local levels and challenges therein.

Why in the News?

• Karnataka, Kerala, and Tamil Nadu accuse the Central government of playing favorites with federal funds.
• Chief Ministers lead the charge, protesting in the capital for their fair share of the pie.
• “Stepmotherly treatment” cries: Claiming discrimination based on political affiliation, they demand equal distribution for development.

Central Government’s View on North-South Economic Divide

• Growth Asymmetry: Recognizes a notable growth divide between the North and the South regions of India.
  • South regions exhibit higher growth rates, around 8%, while the North lags behind at approximately 4-5%.
• Global Perspective on Regional Disparities:
  • Views regional growth discrepancies as a common phenomenon worldwide, influenced by factors such as geography (coastal line, fertile plains), literacy rates, and historical legacies.
• Promotion of Regional Competitiveness:
  • Advocates for reframing the debate from one of comparison to one of fostering excellence and competitiveness in all regions.
  • Aims to leverage regional strengths to enhance global competitiveness.
• Challenges Faced by Northern States:
  • Acknowledges that many northern states are landlocked, lacking access to ports and international markets.
  • Notes the historical impact of colonization, suggesting northern states bore a heavier burden compared to southern states.
• Debates Around Regional Disparities:
  • Views current discussions on regional disparities as driven by domestic politics rather than constructive dialogue.

Fairness of Resource Allocation by the 15th Finance Commission 

• Equitable Distribution Based on Population Proportions:
  • The 15th Finance Commission has formulated a comprehensive and equitable formula for the allocation of funds received by the national exchequer.
  • Upon careful examination of the data, it becomes evident that the distribution of funds is indeed fair and balanced.
• Southern States’ Population Share and Fund Allocation:
  • Southern states collectively account for approximately 17% of India’s total population.
  • Analysis of the allocation of central grants to centrally sponsored schemes reveals that these states receive Rs 72,826 crore out of a total of Rs 2.57 lakh crore disbursed by the central government.

• Alignment with Population Share:
  • Remarkably, this allocation amounts to 30% of the total funds spent, significantly exceeding the proportion of the southern states’ population.
  • This discrepancy prompts the question: where is the perceived disparity?
• Centre’s Proportional Fund Allocation:
  • Contrary to claims of disparity, the data underscores the fact that the central government allocates funds in line with the population proportions of various regions.
  • The allocation of resources by the Centre reflects a commitment to fairness and equity in addressing regional development needs.

Political-Psychological Divide

• Recognizing the Perception Gap:
  • It is acknowledged that the narrative of disparity is fueled by the perceived gap between what regions contribute and what they receive in terms of allocations.
  • Highlighting the transformation of this narrative from purely economic concerns to a political-psychological divide.
• Countering Political Manipulation:
  • It emphasised the importance of presenting counter-arguments to the people to dispel misconceptions and prevent the proliferation of divisive sentiments.
• Promoting Balanced Growth:
  • Proposes the pursuit of more balanced growth strategies to address regional disparities.
  • Suggests that the government should provide additional incentives, such as subsidies, tax breaks, improved infrastructure, and support for human development indices, to regions that lag behind economically.

Central Government’s Policies for Southern States

• Policy Neutrality Towards Regions: Highlights the government’s focus on implementing policies that serve the broader interests of the nation over catering to specific regions.
• Impact of Sagarmala Project: Acknowledges that the project has disproportionately benefited southern states due to their higher concentration of ports.
• Objective of Trade Enhancement: Clarifies that the primary objective of the Sagarmala Project was to boost Indian trade rather than gaining political advantage.
• Fair and Balanced Policy Approach: Affirms that the government has pursued a fair and balanced policy approach, taking into account the specific needs and absorptive capacities of different regions.

Southern States’ Development Model

• Widespread Issue of Welfarism and Fiscal Imprudence:
  • It is acknowledged that welfarism and fiscal imprudence as prevalent issues across India, not exclusive to Southern states.
  • Challenges the perception of Southern states, particularly Tamil Nadu (TN) and Kerala, following paths of fiscal profligacy, suggesting that they may have managed their finances effectively.
• Efficient Allocation of Funds:
  • Notes that Southern states may have effectively allocated funds to sectors like education and healthcare, resulting in higher returns on capital compared to some Northern states.
• Potential for Balanced Development Model:
  • Suggests that successful strategies from Southern states, particularly in social welfare and resource allocation, could inform the Govt’s development agenda.

Dispelling Perceptions of Regional Favoritism

• Promoting Multiple Defence Manufacturing Hubs:
  • Advocates for the establishment of multiple defence manufacturing hubs across the country to strengthen the defence sector.
  • Rejects the notion that the Centre’s decision to build a defence corridor in Uttar Pradesh (UP) is at the expense of traditional defence hubs like Karnataka and Telangana.
• Holistic Approach to National Development: Emphasizes the significance of diversifying investment across regions to promote overall economic growth and development.
• Diversion of Investments:
  • Addresses past controversies, such as the diversion of investments from Maharashtra to Gujarat, as part of normal economic dynamics rather than favoritism.
    • Examples like the Gujarat International Finance Tec-City (GIFT City) in Gujarat and the possibility of establishing similar centers in the South to compete with Singapore in the future.
    • Highlights the need for strategic planning and expansion to maintain competitiveness.
  • Comparative Global Centers:
    • Singapore and Dubai as examples of global centers emerging from inefficiencies in India.
    • Building GIFT City in Gujarat could position it to compete with Dubai.

Future Trends for Economic Prosperity in the Region

• Leveraging Unique Competitive Advantages:
  • Each state in the South has developed unique competitive advantages.
  • Emphasis should be placed on building upon these advantages to create globally competitive scale, speed, and size.
• Promoting Disproportionate Value Addition:
  • Building globally competitive scale and speed will facilitate the generation of disproportionate value.
  • This value can be harnessed to drive development either through state exchequer initiatives or through organic economic growth.
• Encouraging Start-up Ecosystems Beyond Bengaluru:
  • The delicate balance lies in determining how much emphasis should be placed on nurturing unique specialties versus replication and distribution.
  • While Bengaluru has established itself as the start-up capital, efforts should continue to strengthen its ecosystem, with benefits potentially reaching other regions like Mysore or Kakinada.
• Identifying Opportunities for Specialization:
  • States like Andhra Pradesh, with abundant resources and infrastructure, have the potential to become leaders in specialized fields like semiconductor manufacturing.
• Adapting to Emerging Trends:
  • States like Tamil Nadu, with established manufacturing bases like the auto industry, should focus on adapting to emerging trends such as the transition to electric vehicles (EVs).

Southern States Relevance in National Politics

• Enhanced Awareness and Education:
  • Greater awareness and education efforts will be undertaken to address concerns raised by Southern states.
• Emphasizing Proportional Representation:
  • It will be emphasized that despite comprising 17% of the population, Southern states currently hold 132 seats in Parliament.
  • This represents 25% of the proportional representation, highlighting their significant political presence.
• Inevitability of Political Size Corresponding to Population:
  • It will be conveyed that in a democracy, political representation aligns with population size.
  • As population increases, representation in Parliament naturally adjusts accordingly.

Source: https://www.newindianexpress.com/nation/2024/Feb/20/north-vs-south-debate-only-serves-local-politics

Mains question

Critically analyze the recent protests by southern states against the Union government’s federal fund allocation, considering historical context and potential impact on national unity. (250 words)