Will delimitation hurt Southern States? Fiscal impact explained | Business Matters
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[00:00] The recent defeat of a bill that sought to expand Parliament while allowing 33% reservation for women brings to the fore this question.
[00:09] If delimitation were to take place in the traditional sense today, what will be the financial or the fiscal impact on states?
[00:16] Will the states that claim that they will lose out on representation in Parliament with a new delimitation exercise, will they also lose out financially or will they benefit from it?
[00:29] Hello and welcome back to Business Matters of the Hindu with me, Bharat.
[00:32] Delimitation is a process by which limits or boundaries are fixed for territorial constituencies.
[00:39] This is usually done on the basis of population for the given region.
[00:43] For those new to the debate, it is important to know that states where population has been controlled in compliance with guidelines since 1971 stand to lose the most if a new delimitation exercise were to be carried out based on population.
[00:57] With populations that have grown slower than several other populous states, these
[01:02] Several other populous states, these states, especially in the south, will have fewer of their representatives in Parliament if a delimitation exercise were to be carried out in the traditional manner.
[01:10] The states that could potentially be affected say that this is unfair to them as it seems like a punishment.
[01:16] Lesser representation in Parliament for aligning to the country's efforts to control population back in the day.
[01:24] Taken together, the population of southern states, namely Karnataka, Andhra Pradesh, Telangana, Kerala and Tamil Nadu was close to a quarter of India's total population according to the 1971 census.
[01:39] By 2011, this had declined to about 21%.
[01:42] These five states together collected more than a quarter of the country's direct taxes and about 29% of its goods and services tax.
[01:50] But together, they get 15% of the center's pool of taxes as per the 15th Finance Commission according to data seen at the India Spend website.
[02:00] So, what will be the fiscal impact?
[02:03] So, what will be the fiscal impact?
[02:05] For delimitation in the traditional sense need not be just a political mapping exercise.
[02:09] It could become potentially an economic one.
[02:10] In the Indian structure, it is not possible to look at representation in Parliament separately from the working of the Finance Commission.
[02:18] Historically, Article 275 of the Constitution has provided a mechanism for the Finance Commission to recommend aid or grants in aid to states.
[02:27] These are designed to help states with developmental projects and address revenue deficits.
[02:33] Political observers point out that recent commissions have often preferred discretionary funding as seen under Article 282 under which grants are at the discretion of the Union Government and are not based on any clear formula as in the case of Article 275 which allows grants to be based on Finance Commission recommendations.
[02:53] The argument goes that with potentially lesser representation in Parliament, the ability of these affected or potentially affected states, the ability of these states to question or check this shift.
[03:05] states to question or check this shift towards discretionary resource.
[03:06] towards discretionary resource allocation would diminish even further.
[03:09] allocation would diminish even further.
[03:11] Now, since we're talking finances, how much does each MP get to address the needs of his or her constituency?
[03:16] As per current rules, each MP receives rupees 5 crore per annum under the MPLADS or the Member of Parliament Local Area Development Scheme to address the needs of their constituencies.
[03:27] This amount is irrespective of the size of the constituency, the population of the constituency and so on.
[03:31] Now, if delimitation were to take place in the traditional sense and if the formula does not change and each MP continues to get only rupees 5 crore per annum and the number of MPs from that particular state to Parliament reduces because of the new exercise, then of course the funds allocated under this scheme at an overall per state level may be impacted.
[03:53] I mean the see these states may be impacted because they would fewer MPs and fewer funds allocated.
[03:57] But this need not be the case.
[03:59] The Union Government could well come up with a new formula that could ensure that overall allocation under this scheme for particular states could remain the same.
[04:07] Particular states could remain the same or go up and so on.
[04:09] Or go up and so on.
[04:11] But political commentators point out that the loss of ability to influence fiscal policy at a national level is far more important than the allocation of funds under such schemes.
[04:22] Now, here's an interesting perspective.
[04:24] Not only do people in a state require adequate representation in Parliament, but also every state as a unit requires equal representation.
[04:35] In many mature federations such as in the US, the upper house and in this case the US Senate exists specifically to provide equal representation to states regardless of size and this protects against potential fiscal policy that favors the majority.
[04:50] So, in the case of the US, California, the most populous US state with 3.9 crore people as of the end of 2023, would have the same representation in the Senate as Wyoming which is the least populated at 6 lakh people.
[05:07] Our own upper house, namely the Rajya Sabha, is calibrated to population in a sense.
[05:12] So, this irks political representatives who seek to protect the interests of the smaller of the economically efficient states.
[05:17] With the Lok Sabha being anyway proportional to population, southern states that contribute significantly higher to national GDP fear loss of leverage.
[05:27] But since we're talking about contributions to national in the nation in fiscal terms, here's an interesting perspective.
[05:33] India is somewhat unique in this you know in this instance.
[05:37] Take the example of Canada.
[05:40] There, the states that are the least populous or have lower populations are also smaller in economic terms.
[05:45] In India, that's not the case.
[05:47] States that contribute significantly higher or disproportionately higher to national GDP or in other fiscal terms are often the ones that have seen the best demographic outcomes say in terms of lower fertility rates, etc.
[06:02] Now, here's a question that could give rise to a debate.
[06:04] Will increasing the size of Parliament as was proposed
[06:08] The size of Parliament as was proposed recently and defeated in Parliament.
[06:10] Recently and defeated in Parliament, will increasing the size of the Parliament result in better representation?
[06:13] Parliament result in better representation?
[06:16] Now, here's an answer or a perspective that could cut both ways.
[06:18] A perspective that could cut both ways.
[06:20] It's interesting.
[06:23] The effective representation in legislature need not be confined only to the number of representatives from a certain region.
[06:24] Legislature need not be confined only to the number of representatives from a certain region.
[06:26] Need not be confined only to the number of representatives from a certain region.
[06:27] Of representatives from a certain region.
[06:30] It is also reflected by the quality of discussion, the number of times the house meets, the participation of representatives and the quality of debate on legislation.
[06:33] Quality of discussion, the number of times the house meets, the participation of representatives and the quality of debate on legislation.
[06:35] Times the house meets, the participation of representatives and the quality of debate on legislation.
[06:38] Of representatives and the quality of debate on legislation.
[06:41] If there is a decline in the time spent on active, transparent public debate, says a political observer as is the case in India, then it could become normal for landmark bills with long-term impact being passed with minimal parliamentary scrutiny.
[06:43] Decline in the time spent on active, transparent public debate, says a political observer as is the case in India, then it could become normal for landmark bills with long-term impact being passed with minimal parliamentary scrutiny.
[06:45] Transparent public debate, says a political observer as is the case in India, then it could become normal for landmark bills with long-term impact being passed with minimal parliamentary scrutiny.
[06:47] Political observer as is the case in India, then it could become normal for landmark bills with long-term impact being passed with minimal parliamentary scrutiny.
[06:50] India, then it could become normal for landmark bills with long-term impact being passed with minimal parliamentary scrutiny.
[06:52] Landmark bills with long-term impact being passed with minimal parliamentary scrutiny.
[06:55] Being passed with minimal parliamentary scrutiny.
[06:57] Scrutiny. Will increasing the number of MPs fix this problem?
[07:00] Will increasing the number of MPs fix this problem?
[07:02] He asks. What is your view?
[07:04] What is your view?
[07:06] We'd love to hear your views in the comment section.
[07:08] We spoke to a person who has gained great depth in such debates over the years, but the person wishes to remain anonymous.
[07:15] There are a couple of suggestions that come up.
[07:19] One, if southern states in this instance, but any state that has to make do with lesser representation because of a delimitation exercise, lesser representation in the Lok Sabha, then the Union Government should make sure that the formula for calculation of representation Rajya Sabha should go up such that these states get a higher participation than is currently available in the Rajya Sabha.
[07:42] So, it offsets, there's a balance.
[07:45] Then, finance bills should also be discussed in the Rajya Sabha so that these states have the opportunity to influence fiscal policy.
[07:55] Two, there must be a certain minimum number of days or a certain period that is available to debate over important legislations.
[08:04] Uh there should be time for public comment and this person points out that
[08:09] Comment and this person points out that the Constituent Assembly that helped draft the Constitution actually allowed for a period of eight months for the public to comment and participate in this debate or contribute to the drafting of the Constitution.
[08:25] He points out that some very important bills are passed in a hurry in a matter of days in today's Parliament and that is not healthy is what the person points out.
[08:32] That's all we have for you, but do not go away.
[08:34] As always, we have a nugget of information and a quiz question to follow.
[08:39] Here it goes.
[08:41] Did you know that Western nations tend to go through this delimitation exercise rather regularly?
[08:46] As you see on your screens, the US does this every 10 years.
[08:48] The Canada again every 10 years.
[08:51] Australia at least every seven years.
[08:53] New Zealand five and the United Kingdom it varies.
[08:56] Happens anywhere between eight and 12 years.
[08:59] The last time was before the 2024 general election.
[09:00] And here's the quiz question for this week.
[09:05] In 1993, a court in North Carolina in the US threw out a
[09:10] Carolina in the US threw out a government's decision on redrawing a government's decision on redrawing a district's boundaries in a delimitation exercise.
[09:15] Why did this happen and what did the court say?
[09:17] It's interesting.
[09:19] Watch out for the answer next week.
[09:21] And here's the answer to last week's question.
[09:22] The question was when was the only time the US fully paid off its national debt and under which president was this?
[09:30] The answer is the only time the US fully paid off its national debt was under President Andrew Jackson who was president between 1829 and 1837.
[09:40] That's all we have for you, folks, in this episode.
[09:42] If you enjoyed what you saw, do not forget to like, share and subscribe.
[09:45] Until we meet again next week, have a wonderful time ahead.