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Southern States Unite Against Centre on Fund Allocation Disparity, to Hold Meet Tomorrow

Siddaramaiah told News18 that Karnataka contributes nearly 10 percent of the overall Central revenue, yet the state gets back only five percent of the redistributed funds.

Neethu Reghukumar | CNN-News18

Updated:April 9, 2018, 4:22 PM IST
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Southern States Unite Against Centre on Fund Allocation Disparity, to Hold Meet Tomorrow
File photo of Kerala Finance Minister Thomas Issac.
Thiruvananthapuram: The crucial meeting of the ministers of the southern states will take place in Kerala's capital Thiruvananthapuram on Tuesday over alleged diversion of tax revenues for the development of north Indian states.

Kerala Finance Minister, Thomas Issac, said, “Karnataka Agriculture Minister Krishna Byre Gowda, Puducherry CM V Narayanasamy, Tamil Nadu Deputy CM O Panneerselvam and Andhra Pradesh Finance Minister Yanamala Ramakrishnudu will take part in the meet,” said Issac.

The meeting will begin at 10am with an address by Kerala Chief Minister Pinarayi Vijayan.

The escalation in friction over division of funds comes after the central government's recommendation to the 15th Finance Commission of using population data from the 2011 Census, instead of the 1971 Census, for distribution of central tax revenues.

Issac said the terms of reference is an attack on federal structure and it is undemocratic. “If the population criteria is the 2011 Census, there is a very significant loss for southern states. Between 1971 and 2011, our population has only increased by 56% .In some of Hindi heartland states, population has increased by more than 150 %,” he said, adding that the formula would give 80% - 85% weightage to the backward states.

“This is more like a backwardness formula. We want it to give weightage to efficiency too,” he said. The minister also said that it is undemocratic for Finance Commission to be deciding on "disincentivising populist programmes."

He added that it is difficult to say exactly how much will be the loss. “If we keep the other parameters of the 14th finance commission and just change the census for Kerala, the loss in allocation will be about Rs 20,000 crore. For Tamil Nadu, it will be around Rs 40,000 crore,” Issac added. Issac said that he wants to play down the political overtones as this is an issue that is seriously affecting the southern states.

Andhra Pradesh CM Chandrababu Naidu was the first to rake up the issue. “There is nothing called Centre’s or State’s money. It is the taxpayer’s money. Southern states contribute the maximum tax revenue to the Centre but they are diverting the money to the development of the North,” said Naidu.

Siddaramaiah told News18 that Karnataka contributes nearly 10 percent of the overall Central revenue, yet the state gets back only five percent of the redistributed funds. “I endorse the opinion of the Andhra CM. Karnataka contributes 9.56 percent to the overall Centre in revenues but it gets back just around 4.5 percent,” he said, adding that the South was being wronged.

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| Edited by: Tarun Bhardwaj
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