The Curious Case Of Indian States

Article By: Gaurav Kumar

Indian constitution, the lengthiest written constitution of the world defines Indian territory as the “Union of states” and no state has the right to separate from the Union. Although we follow federalism, we are far from being a federal structure and is thus called a “quasi-federal” state due to the emergency provisions  and centre being far more powerful than the states. Even the “Union list” contains more items than the state and concurrent lists. In true federal structures like USA, all the states are equally represented at the central level whereas in India, we have proportional representation in the parliament. Uttar Pradesh gets more parliamentary representation than the other bottom ten states combined. So, basically whoever wins the top five states, wins India.

The case of Proportional representation

Due to the proportional representation, southern states always feared of getting less representation in parliament in future as they had low birth rates compared to northern states. It was a genuine concern as developed states have seen economic prosperity which leads to low birth rates, which is very appreciable, but at the political level their proportion of population compared to other states decreases day by day resulting in less seats in parliament. By rule, Uttar Pradesh, Bihar, West Bengal, Orissa, Madhya Pradesh etc should get more parliamentary representation due their population but it will lead to reduction in parliamentary seats for the southern states like Tamil Nadu, Kerala, Karnataka, Andhra Pradesh.

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Being opposed by the southern states, proportional representation was fixed according to the 1971 census. Population distribution has changed a lot in the last 50 years due to many factors like migration of labours, division of states, formation of new cities, development of industrial zones etc but the representation in parliament is same ie.  according to the 1971 census. Due to this anomaly, some places in Delhi has 400000:1 representation compared to 15000:1 in other places. This leads to mis-governance as it is not possible for an MP to effectively represent 4-5 lakh people in a single constituency.

The case of Economic development

In one of my previous blog “why southern states are more developed than northern states” , I pointed out many factors responsible for the development of a state, like ports, coastal industrial zones, special economic zones, fishing zones etc which accelerates the  pace of development. Presence of port is the major factor which leads to setting up of industrial zones for exports further leading to opening of colleges, schools, infrastructure development etc. Thus, port acts as a seed for development. In most of the developed countries like UK, USA, Germany, China we observe that industries are set up near to the coast which helps in saving in transportation cost.

The landlocked states act as human resource provider. They can never see industrial growth as the coastal states has seen. This is due to the economic cost of setting up of an Industry there. Raw materials will need to be imported and then transported to the industry. After manufacturing it will again need to be transported to nearest port and then exported. Even if the landlocked states have cheap labour, it is still not viable for an industry to be setup. This leads to economic divide between states leading to coastal states being richer than landlocked states.

Some states like Haryana and Western UP are close to Delhi. Due to the NCR effect and “growth pole theory” they get more developed. In other case, some states like Punjab got benefit by the green revolution and subsidy on agricultural equipments. Some cities in Jharkhand like Dhanbad and Ranchi saw growth due presence of coal and iron ore which resulted in opening of steel mills but other states were not so resource rich.


After the telecom and banking revolution, northern states which had never tasted the fruits of development and were termed as “Bimaru states” also saw significant growth. States like Bihar and Madhya Pradesh has topped the developmental charts in the past decade.

We can point out many other factors like misgovernance, policy paralysis, unfair decentralisation of power, lack of resources etc for the slow growth of a region but these factors play a very small role. The main factor affecting the economic growth is geographical factor which influences all other factors like investment, city development, planning etc. The coastal states will continue to industrialize and the land locked states will act as human resource supplier. This has happened all throughout the world and will continue happening due to geographic and economic factors.

The feeling of “being neglected” by the centre

Almost all the states I have lived and visited, I have seen a common feeling among the local people, it is the “feeling of neglect” from the central government. I have seen people of developed states like Tamil Nadu and Karnataka complaining their income is taken by the central government and is distributed to the poor states like UP, Bihar and MP. On the other side, people of poorer states complain that central government is busy investing in the coastal states and they are yet to see significant industrialisation.

So, Who is right?

Is centre really distributing the hard-earned money of southern states to northern state people in the form of subsidy? Some people claim that more than 80% of the tax collected from southern states get distributed to northern states. According to them, states like Bihar, MP and UP are a burden to them. It’s their money who is feeding these people.

In emotions you can say anything you want, but factually it’s not true. After 14th finance commission, the share of the states in the net proceeds of the sharable Central taxes is 42%. It means 42% of the tax collected is directly returned to the state. So, the emotional statements like “80% of the taxes collected goes to the northern states” is false.

Most of the central sponsored schemes like Bharatmala, Sagarmala, coastal economic zones, western and eastern economic zones which are worth hundreds of lakhs of crores  are for southern coastal states only. In fact, most of the income tax paid by southern India is invested back in their state only. It is a delusion to think that their income is distributed to poorer states.

Schemes like MGNREGA, which are implemented to help the poorest of the poor are not really benefitting the northern states. In fact, due to poor governance or weak panchayati raj system, northern states have benefited little. In government reports, Tamil Nadu, Andhra Pradesh, Rajasthan were the states topping in job creation through MGNREGA.

States like Jharkhand and Chattisgarh got separated from Bihar and Madhya Pradesh in 2001. Bihar suffered huge revenue loss due to mines going in Jharkhand. It even demanded ” Special state” status but was always ignored from centre. It was the telecom and banking revolution which helped Bihar grow with double-digit rate in the past decade. During elections, it was promised from the centre of 1.5 lakh crore loans but till now it’s just a promise. So, when did the poor states see the transfer of money from southern states? In the last budget also Bihar had revenue surplus of 10000 crores.

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After the implementation of GST, tax is consumption based instead of origin based. This will lead to  increase in revenue for the poorer states which lack industrialisation.

Hope India prospers as a whole and the fruits of development is tasted by all.

Jai Hind.

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