TAMIL NADU FARMER PAYS FOR THE UP LOAN WAIVER
Mr Praveen Chakravarty is a Visiting Senior Fellow at IDFC Institute. He has also worked with the Unique Identity Authority of India (UIDAI). Subsequently, he worked as an advisor to the National Skills Development Agency (NSDA). Chakravarty is the Founding Trustee of IndiaSpend, India’s first non-profit data journalism initiative. He is a board member of Centre for Civil Society, a private think-tank. Chakravarty holds an MBA from The Wharton School and an undergraduate degree from BITS Pilani.
The Department of Humanities and Social Sciences, IIT Madras in collaboration with the Centre for Civil Society, organised a policy dialogue on the 18th of August, 2017. The lecture began at 6:15 and I opened my pen, eager to jot down and note Mr.Chakravarty’s points about the protesting Tamil Nadu farmer. However, what I got instead was this:
Suffice to say that the video floored me.
The Constituent Assembly, according to Mr. Chakravarty had the onerous task of building a nation out of what, until then, had been 550 odd princely states and a few mega-provinces. There were too many divisive factors, and the only way to make unity in diversity was through centralization. This made sense at a time when the difference between different states was not much – all states were more or less equally poor. Yet, 70 years on, things are not the same. The question is not Why is India Poor? but Which India is Poor? According to Mr. Chakravarty, the differences between states on various counts has become so staggering that it does not make sense to consider India as a homogeneous entity, as is common in political-economy circles, anymore. States have developed; the need of the hour is decentralization and not further centralization.
While four states (Maharashtra, Karnataka, Gujarat and Tamil Nadu) account for 55% of the central taxes measured in per capita terms, the central government disburses 42% of the taxes that it receives to all the states and union territories in such a manner that for every Rs 100 that Maharashtra pays, Maharashtra receives Rs 15 back. Uttar Pradesh and Bihar, on the other hand, receive nearly Rs 400 for every Rs 100 that they contribute to the centre. This has to change, according to Mr. Chakravarty, and in support of his argument, Mr. Chakravarty presented quite a bit of data driven information. While in 1960, the average Maharashtrian earned 1.5 times as much income as the average Bihari, this gap had widened to 3 times in 2014. Similarly, the median age of Tamil Nadu and UP was 21 in 1960 – in 2014, this had widened to 30 and 21 respectively. Similar trends could be observed for literacy and life expectancy – instead of converging, as would be expected when redistribution of wealth occurs, most of the indicators were diverging!
Why is this so? Mr. Chakravarty admitted to not having a solid answer. However, in response to questions, Mr. Chakravarty presented two interesting tidbits of information. One, till 1990, states were in fact converging with respect to development indicators. From 1991, however, there was a sudden divergence – the reason behind which Mr. Chakravarty refused to speculate on. Secondly, Mr. Chakravarty did concede that the reason behind the divergence could be that wealthier states cornered greater investment due to their infrastructure and human capital, growing richer while the poorer states remained poor.
One very empathetic point that Mr. Chakravarty made was that the GST was not as rosy as it looked. By depriving states to set their own taxes, the GST prevented states from planning according to their needs. For example, Tamil Nadu, with a median age of 30, was at least a generation older than Bihar, with a median age of 19. Within a few years, Tamil Nadu would have to worry about providing pension and other old age benefits to its residents while for Bihar, that problem does not figure in the calculations at all. When service tax is to be applied on certain facilities related to old age, Tamil Nadu might want a lower tax while Bihar would not mind a higher tax. Similarly, chicken in Bihar might be a luxury, but in Kerala, it is a necessity. How can a common tax on chicken be realized then? These were very valid questions that Mr. Chakravarty raised, and the audience responded very enthusiastically to his presentation – so much so that Mr. Chakravarty informed me that the quality of the questions that he had received in the Department of Humanities and Social Sciences, IIT Madras was way ahead of what he had received in other colleges for the same lecture.
Many other interesting things were discussed during the long question answer session, but I shall omit the same here. Take it as punishment, if you will, for missing out on an extraordinary lecture.
Watch the video given below to see Mr. Praveen Chakravarty clarify a few questions that he got after his video went viral. And no, he does not espouse a United States of South India.
Report by Venkataraman Ganesh
Photograph by Ashraya Maria