Why the south-vs-north debate is a flawed way to analyse the 15th finance commission formula

If this argument of south-vs-north is followed through, a direct corollary would be to also oppose money flows from Bengaluru to Bidar or from Whitefield to south Bengaluru.

The terms of reference for the 15th finance commission (FC) have come under attack from many quarters in the last few weeks. Of these, the most prominent line of attack is that using 2011 census data will end up hurting the interests of the southern states.

Since their population is one of the factors considered while distributing tax revenues among states, some say the southern states will be punished for controlling their population. To resolve this moral hazard, a few southern states are demanding that the dated 1971 census be used for the FC’s revenue distribution formula.

But this claim and the ‘north-vs-south’ debate sidestep other substantial flaws in the terms of reference for the 15th FC.

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