In September of 2023, The Economist commented how the Prime Minister was amplifying regional divides commenting on political representation and economic indexes with a large number of wealthy states being concentrated in the south. The debacle that has been seen as nonsensical, nationwide, recently gathered attention by shocked audiences when an INC MP from Karnataka, D.K Suresh, was noted to have made inflammatory comments criticising the taxation system that would supposedly manifest into successionism. His comment would be fiercely criticised both within Karnataka and within his own party with Mallikarjun Kharge making comments endorsing national unity, and televised reports commenting how he gave a sugar coated separatist comment and therefore is unfit to be in office.
While Kharge and the Congress party are in another yatra and have the issue of ensuring a coalition and a party that can deliver for all; one issue that has been repeatedly brought into attention is of wealth distribution across India from revenues collected. When comparing wealth by state, it’s clear that wealthier states particularly emphasises in human development indexes and by income include states like Gujarat, Maharashtra, Karnataka, and Tamil Nadu tend to be the highest, while the lowest are usually within the BIMARU states (Acronym for Bihar, Madhya Pradesh, Rajasthan, and Uttar Pradesh since the 1980s, by demographers and social scientists).
With the combination of income taxes, it’s clear that southern states and the wealthier states across India, which also include non southern states like Gujarat, and Maharashtra, tend to receive less in comparison to BIMARU states. While revenues kept by states before going to the government sit at around 41% according to current policy, as states economically grow so do their need for more funding. More funding indicates better prosperity and addressing state expenses, and many see current policy as restrictive.
In many countries like India, governments tend to distribute funds for equitable development and this is seen as a positive measure. However, in these governmental measures, many also evaluate the goal of equitable development based on the expectation that poorer states will become more developed or there is the indication of more progress. In recent years, many politicians and civil society groups have developed concerns on how the distribution of revenue could be politically motivated by party.
With states like Uttar Pradesh, Bihar, and even many north eastern states receiving many funds for every 100 rupees paid in tax along with comparing development indexes, it can be inferred there is the need to expand the percentage of revenue individual states get to retain, or rethinking how funds are distributed. The topic of distribution also grants light to the question of how funds are being used by states. It is important to understand if funds are being used for development, military expenditure, or if it’s potentially being swindled in corruption. Measures and queries on these aspects of taxation and revenue distribution would also ensure deeper trust between states and central governments.
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