Ever since floods ravaged Kerala in the south-western coast of India, an anti-north India propaganda (which serves no purpose in providing relief to the victims) is being stoked in some corners of social media. The alleged grievance of people furthering this narrative is that the states of the north have not come to the aid of Kerala, a claim which in itself is untrue. However, it doesn’t stop there. The case is then made that the ‘poor and backward’ north Indian states are a drag on the ‘prosperous and progressive’ south Indian states and that this is unfair to the south and is a legitimate reason to harbour a grievance.



Such a narrative, if not called out early, can have potentially disastrous consequences. So, here are three reasons why the divergence between the north and south Indian states is just that, divergence, and not division, or a cause for grievance.

First, the Indian experience of a few states shouldering the bulk of the fiscal burden is hardly uncommon. The United States (US), Germany, the United Kingdom (UK), and Switzerland have a similar lopsided sharing of the fiscal burden.

Second, using the state as a unit of analysis obfuscates the fact that a city (or a few cities) within those states pay a bulk of the taxes. Mumbai, Chennai, and Bengaluru for example, are paying the bulk of the taxes from their states.

Third, the disproportionate tax burden on a few states stems from India’s unbalanced development, which in turn reflects causes that have deep roots in history as well as mirrors the global trend towards increasing agglomeration. Without persistent, large fiscal transfers from the richer states to the poorer ones, the gap will only widen and eventually undermine the foundations of a united India.

International Comparison

Based on Wallethub’s data, the Atlantic made the following chart, which shows that 14 states in the US get back less than they pay in taxes (in the chart, if a state is below $1, it means that it is getting less than $1 in return for every dollar it pays in taxes).