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Southern states should get larger central funds, says former CEA
The delimitation exercise to determine boundaries for assembly and parliamentary constituencies based on population is likely to be held in 2026
Southern states should get a slightly larger portion of funds from the Union government to avoid disaffection likely to be caused by the impending delimitation exercise in 2026, India’s former chief economic advisor Arvind Subramanian said on Sunday, even as former RBI governor Raghuram Rajan batted for an increase in the devolution of funds to states.
They were addressing an interactive session during Tamil Nadu’s third edition of the Global Investors Meet (GIM) in Chennai on Sunday. Subramanian and Rajan are also part of an international cohort of experts advising the DMK-led Tamil Nadu government.
The delimitation exercise to determine boundaries for assembly and parliamentary constituencies based on population is likely to be held in 2026 after the decadal census which has been pending since 2021. Southern states have long feared that any rejig in the number of seats will benefit the more populous states in northern India and hurt south India’s relative weight in Parliament.
“For example, if the political representation changes which gives more power to the Hindi heartland relative to the southern states that have slower population growth, the disaffection will grow because the southern states will say we contribute much more fiscally (but) we are losing political power,” Subramanian said.
The wedge between fiscal power, contribution (of states) and political power will rise over time, he said. “Southern states including Tamil Nadu should retain a slightly larger portion of resources that are coming from the Centre,” Subramanian said. “I think that has to be part of the new social contract going forward.”
He, however, added that he painted a dire picture when he flagged that southern states might question why they should contribute to redistribution of funds (to northern states) when the delimitation exercise takes place in 2026. He expressed hope that the 16th Finance Commission would address this issue.
Rajan, meanwhile, batted for more finances to the states that are investing in huge infrastructure and social projects, saying that “India is too big to be run only from New Delhi”. The issue is that the Centre is raising a lot through cess, which is not being shared with the states, he said. “That is the problem… States are extremely important and we need to devolve more finances to the states and ensure a steady devolution of funds,” Rajan added.
