Rise in southern States’ share in devolution of funds provides no relief to Tamil Nadu
GS3Economy · S&T · Environment · Security· Fiscal policy, budget & taxation (GST)· Mains·
Why in news
Experts criticized the 16th Finance Commission's vertical distribution scheme as unfair to Tamil Nadu despite a marginal increase in its share.
Background
The 16th Finance Commission's vertical distribution scheme saw southern states' combined share decrease while northern states' share increased. Kerala and Karnataka recorded the highest growth rates in vertical devolution, with Kerala ranking second only to Haryana.
Facts for Prelims
- FactKerala ranked second only to Haryana in vertical devolution growth rates under the 16th Finance Commission.
- FactTamil Nadu, Andhra Pradesh, and Telangana implemented IT-enabled data analysis for beneficiary identification in subsidies.
- BodyThe 16th Finance Commission determines the vertical and horizontal distribution of funds.
For Mains
Q. Critically analyze the impact of the 16th Finance Commission's vertical and horizontal devolution criteria on the fiscal autonomy of southern states.
Dimensions to cover in your answer
- Formulaic friction: Removal of GDP contribution criteria in horizontal devolution affecting high-performing states
- Fiscal imbalance: Divergence between northern and southern states' shares in vertical distribution
- Data-driven governance: Success of IT-enabled beneficiary identification in Tamil Nadu, Andhra Pradesh, and Telangana
Keywords: Vertical Devolution · Fiscal Federalism · Horizontal Distribution · Finance Commission · Subsidies · Data-driven Governance
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