A put up by monetary planner D Muthukrishnan on social media platform X has sparked recent debate on the Centre-state monetary relationship, significantly relating to Tamil Nadu’s financial contributions to the Union authorities.
Muthukrishnan questioned the Centre’s frequent bulletins concerning the monetary help offered to Tamil Nadu whereas seemingly ignoring the income the state generates for the Union authorities. He argued that in a federal construction, monetary exchanges must be seen as reciprocal moderately than one-sided help.
“Be it agriculture or finance minister, they checklist out how a lot they’re giving Tamil Nadu. However there must be a way of equity. They need to equally checklist out how a lot they’re receiving from Tamil Nadu. Not solely Tamil Nadu, all developed states give greater than what they obtain,” he wrote.
Muthukrishnan’s remarks mirror a bigger ongoing debate on fiscal federalism in India, the place economically stronger states usually contribute extra to the Centre in taxes than they obtain in allocations and grants. Tamil Nadu, being one in all India’s most industrialised and high-revenue-generating states, is amongst those who contribute considerably extra to the nationwide exchequer than they obtain in central funds.
The monetary skilled identified that the Centre’s stance usually makes it look like Tamil Nadu is being finished a favour, when in actuality, the state performs a significant function in funding nationwide initiatives and subsidies that profit different states as nicely.
“So, why does the Centre maintain mentioning what it’s doing for Tamil Nadu? To make the dialogue honest and balanced, let the Centre additionally say how a lot it’s receiving from Tamil Nadu,” he added.
Tamil Nadu, together with different developed states akin to Maharashtra and Karnataka, has beforehand voiced considerations over income distribution. Consultants argue that greater tax-contributing states obtain disproportionately decrease allocations in comparison with their contributions, resulting in calls for for a extra clear and balanced fiscal coverage.
Muthukrishnan’s put up has reignited discussions on the necessity for a clear breakdown of economic transactions between the Centre and states, making certain that allocations are usually not framed as unilateral generosity however as a part of a structured financial system the place states contribute and obtain funds accordingly.
Final month, Reuters reported that the federal government is trying to reduce central tax revenues that it shares with states to a minimum of 40% from the present 41%.
