Fortify fiscal Federalism, heal North-South cleave

Chandrababu Naidu should use his clout in the new government to turn the so-called North-South divide into North-South cooperation and accommodation by ensuring that justice is done for all.
Prime Minister Narendra Modi with key allies TDP chief N Chandrababu Naidu and JD(U) chief Nitish Kumar during National Democratic Alliance (NDA) meeting at 7, Lok Kalyan Marg, in New Delhi on Wednesday, June 5, 2024.
Prime Minister Narendra Modi with key allies TDP chief N Chandrababu Naidu and JD(U) chief Nitish Kumar during National Democratic Alliance (NDA) meeting at 7, Lok Kalyan Marg, in New Delhi on Wednesday, June 5, 2024.Photo | PTI

The Lok Sabha verdict has brought back Telugu Desam Party chief N Chandrababu Naidu and Bihar Chief Minister Nitish Kumar to pole positions in the country’s governance. This will go a long way in strengthening the federal polity and make decision-making more democratic. The composition of the new government is sure to take the country on a path of consensus politics. The last 10 years of Prime Minister Narendra Modi’s rule witnessed a growing unease among states, especially those ruled by the opposition parties. States complained about not receiving a fair share from the divisible pool of taxes and claimed that fiscal federalism has collapsed.

Earlier this year, all the ministers of Karnataka led by chief minister Siddaramaiah staged a dharna in New Delhi in protest against the alleged non-disbursal of the state’s dues. Other states such as Kerala, Tamil Nadu and West Bengal have also complained and protested against the alleged denial of their dues under central schemes. They have also flagged the Centre’s tight control on their borrowing limits and lack of adequate support in times of disasters. These issues need to be handled with political maturity, of which there will be no dearth in the government that is set to assume power.

The two key allies from Andhra Pradesh and Bihar are sure to bring on the table their long-pending demands of giving their states special category status, which entails increased devolution of funds from the divisible pool and up to 90 percent financial support for central schemes. These states suffered as new states were created out of them. Bihar lost most of the revenue it received from the mineral-rich southern parts that became Jharkhand. Similar is the case of Andhra Pradesh. Prime Minister Modi has publicly acknowledged the need for lending a helping hand to the two states. It is time to take action on this front.

Coalition compulsions for the next government will likely lead to a review of some earlier schemes. Nitish Kumar’s party has demanded the scrapping of the Agniveer scheme, which became a major election issue in some states. Other schemes may be reviewed too. Chandrababu Naidu should use his clout in the new government to turn the so-called North-South divide into North-South cooperation and accommodation by ensuring that justice is done for all.

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