19/01/2019 - Indian Economy

KEY POINTS

·        Population acts as main link between state finances and Lok sabha representation.

·        The skew in Central transfers to the poorer states of the east and north is financed from the tax resources contributed by the southern and western states. 

·        Central transfers can make up some, not all, of the inequality. MP gets two-thirds more Central money than Karnataka, and Bihar 50 per cent more than the Telangana state. But per capita social sector spending (here comes the population link) by the poorer states remains lower than in the better-off ones.

·        Meanwhile, the another  issue is state-wise Lok Sabha seat allocation. This has remained frozen for nearly half a century, even as the population in the Bimaru states of the east and north has grown, relative to the south.

·        Keeping the present seat allocation frozen indefinitely would mean steadily more unequal representation across states, especially from southern India where population is stabilising gradually.

·        After the population, governance connects State finances and Lok Sabha representation, efficiency of governance determine the development of the states. States like Maharashtra, Telanagana, Kerala performs better in implementing pro-poor schemes especially at local level when compared to Uttarpradesh, Bihar, Rajasthan.

·        Consideration of more representation in parliament from low performing states doesn’t match with efficiency in implementing schemes due to lack of robust governance.

Measures for addressing issues

·        What should be clear is that the two issues--equalisation of state finances and of Lok Sabha representation--cannot be addressed simultaneously.

·        Addition of more critierias like measurement of deprivation(using MPI), aspects of migration etc needs to taken while transferring financial resources to states.

·        Revision of Population census 2021 should taken carefully to rationalise the representation in Lok Sabha.