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Kerala Finance Minister Calls Meet of All Southern States Over Tax Allocation Disparity

The minister said that all southern states are highly critical of the terms of reference. “It is not in the right spirit of federalism. It will further weaken the federal structure of India and worsen Centre-State fiscal imbalance,” he added.

Neethu Reghukumar | CNN-News18

Updated:March 23, 2018, 8:26 PM IST
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Kerala Finance Minister Calls Meet of All Southern States Over Tax Allocation Disparity
File photo of Kerala Finance Minister Thomas Issac.
Thiruvananthapuram: Kerala’s finance minister Thomas Isaac has called for a meeting of finance ministers of all southern states on April 10 over growing rumbles of tax revenues being “diverted” for the development of north Indian states.

Isaac said that he has written to finance ministers and finance secretaries of all the states, and said that they have in principal agreed to attend the meeting. They are yet to send official acceptance letters though. “I also spoke to all of them over the phone. We will discuss what needs to be done,” he said.

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.

Isaac said that all southern states are highly critical of the terms of reference. “It is not in the right spirit of federalism. It will further weaken the federal structure of India and worsen Centre-State fiscal imbalance,” he said.

The minister said that he was particularly upset about the use of population from 2011 instead of 1971. He said that this would punish states that are following the national family planning policies and have controlled population growth.

“The states have followed national policy in family planning have significantly decelerated population growth. Share of southern states in overall population has also gone down. We should not pay the price for successfully implementing a national programme,” he added.

His comments come just hours after Karnataka Chief Minister Siddaramaiah tweeted "We need to resist" to all chief ministers of 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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