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The Modi Govt has instructed the Finance Commission to use 2011 census figures instead of the 1971 figures, to apportion revenue from taxation between the states.

It is not often that a seemingly technical issue points towards a potentially grave challenge for the survival of our nation itself, but that is exactly what has happened this month. A letter sent to 10 Chief Ministers and the Prime Minister by DMK leader M.K. Stalin, questioning the “ill-conceived” terms of reference of the Fifteenth Finance Commission, has revealed how a thoughtless decision by the Modi Government has opened a Pandora’s Box with incalculable consequences for the country.

The Finance Commission is one of the less well-known institutions of our governing system. It is appointed every five years to review and decide how the country’s revenue from taxation will be apportioned between the states. The Finance Commission uses various criteria to determine this, including each state’s percentage of the national population. But for more than four decades, it has based itself on population figures from the 1971 census.

That may seem odd, since we have had four censuses since 1971 and new numbers have been available to successive Finance Commissions. But the reason for this is very simple, and it was made explicit in relation to a far more vital issue – that of political representation in our Parliament. In 1976, the omnibus 42nd Amendment to the Constitution decided to freeze the allocation of Lok Sabha seats to our states for 25 years to encourage population control, by assuring states that success in limiting population would not lose them Lok Sabha seats. In 2001, the NDA Government of Prime Minister Vajpayee extended this arrangement for another 25 years; its proposal, which became the 91st Amendment, was unanimously adopted by all parties in both Houses of Parliament.

The thinking behind this policy was clear: it was based on the sound principle that the reward for responsible stewardship of demography and human development by a state could not be its political disenfranchisement. While there is some logic to the argument that a democracy must value all its citizens equally — whether they live in a progressive state or one that, by failing to empower its women and reducing total fertility, has allowed its population to shoot through the roof — no federal democracy can survive the perception that states would lose political clout if they develop well, while others would gain more seats in Parliament as a reward for failure.

This is the carefully balanced arrangement that the Modi Government has now so carelessly undone by instructing the Finance Commission to use the 2011 census figures now instead of the 1971 figures, causing Stalin to erupt.

He is not alone. Karnataka Chief Minister Siddaramaiah, in tweets and a Facebook post, has articulated a strong case; and Pawan Kalyan, the former film star who has founded a political party in Andhra Pradesh, has done so as well. “Is the success of south Indian states going to be used against them by Union of India?” he tweeted, expressing “genuine concern that population based formula for sharing tax revenues between states & Center would hurt south Indian states.”

Siddaramaiah’s post goes much farther, raising a whole host of issues relating to Indian federalism, from Karnataka’s ancient history and its right to its own flag, to the importance of honouring the Kannada language and the unfairness of the current tax distribution system: “Historically, the South has been subsidizing the north. … For example, for every one rupee of tax contributed by Uttar Pradesh, that state receives 1.79. For every one rupee of tax contributed by Karnataka, the state receives 0.47. While I recognize the need for correcting regional imbalances, where is the reward for development?” He adds his concern that population is an important criterion for the apportionment of central taxes. “For how long”, he asks, “can we keep incentivizing population growth?”

These are important questions that the rest of India can ill afford to ignore. The states of the “cow belt” – the Hindi-speaking heartland, once called the BIMARU states – have comprehensively failed to improve their development indicators, notably relating to female literacy and women’s empowerment. As a result, their population growth has outstripped that of the southern states. And thanks to the Finance Commission’s new formula, that makes them eligible for a larger share of tax revenues.

We can probably dodge this bullet for now. I have raised the matter with the Finance Commission’s Chairman, N.K. Singh, an adroit and skilful player of the bureaucratic game who – though he pointed out to me that he has no say in the terms of reference given to him — has been left in no doubt about the temperature of the hot potato that has been dropped into his hands. Singh appreciates the seriousness of the issue and will no doubt find a formula that could defuse the crisis for now. He has no choice but to use the 2011 census, but population figures are just one of several criteria used in his Commission’s calculations, and he can reduce the weight he gives to this particular factor in finalising each state’s revenue share.

But the country should pay attention to the greater dangers. While northern states like Bihar, Jharkhand, Madhya Pradesh, Rajasthan and Uttar Pradesh had a decadal population growth rate over 20 per cent between 2001 and 2011, southern states like undivided Andhra Pradesh & Telangana, Kerala, Karnataka and Tamil Nadu grew at less than 16 per cent in the 2001-11 period. My own state of Kerala has the country’s lowest growth rate (4.9 per cent in 2001-11, and dropping, it is estimated, to negative growth by 2021). That is one-fifth of Bihar’s growth rate. Why should Kerala be punished for its impressive performance by losing seats in Parliament and thereby being forced to dilute its voice in national affairs?

The answer, of course, is that those are the rules of democracy: one-person-one-vote means the more people you have, the more political clout, and tax rupees, you get. But in a country like India, whose diversity is held together by a sense of common belonging but constantly under strain from regional, religious and linguistics tensions, such an answer risks rupturing the fragile bonds that hold us all together.

As it is, the Hindi-Hindu-Hindustan politics of today’s BJP is very different from the conciliatory coalition-building of the Vajpayee era. Their blatant majoritarian triumphalism, the brazenness of the Hindi supremacism that infuses their discourse, and the culture of Aryavrat domination that infects their attitudes, have already raised disquiet among many Southern politicians.

The only remedy is to acknowledge that we need a more decentralised democracy, one in which the central share of tax resources is not so crucial, and the political authority of New Delhi not so overwhelming. That could make the concerns raised by the new census figures less relevant.

But as long as our system is what it is, we need to run it sensitively. That is something that, on this occasion again, the Modi government has failed to do.

Dr Shashi Tharoor is a Member of Parliament for Thiruvananthapuram and former MoS for External Affairs and HRD. He served the UN as an administrator and peacekeeper for three decades. He studied history at St. Stephen’s College, Delhi University, and International Relations at Tufts University. Tharoor has authored 17 books, both fiction and non-fiction; his most recent book is ‘Why I am a Hindu’. Follow him on Twitter @ShashiTharoor

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