A New Framework For Intrastate Fiscal Allocations For Redressal Of Regional Imbalance In Karnataka

Abstract

Regional imbalance in Karnataka is a topic of heated political debate. There are allegations of continuous systemic neglect by successive state governments towards the northern part of the state, resulting in calls for separate statehood for north Karnataka from time to time. State governments have attempted to address the problem through various policy measures, the most important one being the formation of a High-power Committee for the Redressal of Regional Imbalance in 2002. The Committee examined the extent of regional imbalance prevalent in the state by building a composite index called the CCDI at the taluk level, using thirty-five indicators across five sectors, and identified 114 taluks as backward taluks of the state. The Committee enlisted a series of recommendations to help these taluks overcome their extraordinary deprivation and converge with the average performance of the state. This study builds on the Committee’s report by critically analysing the theoretical and methodological framework adopted by the Committee in its composite index and the recommendations it proposed for addressing the problem of regional imbalance in the state. A new composite index is constructed as part of the study to assess the contemporary prevalence of regional imbalance in the state, albeit at the district level. The study also recommends a set of policy measures that needsto be taken by the state’s policymakers for effective redressal of regional imbalance, basing the recommendations on the results of the new composite index and a critical analysis of all the existing intra-state planning and fiscal devolution mechanisms. It proposes the assessment and redressal of regional imbalance to happen at the district level rather than at the taluk and division level, as was the case with the Committee, and proposes either the establishment of an independent commission periodically to reviewing the progress made in overcoming regional imbalance and plan to address any persistent regional imbalance for the subsequent term, or the broadening of the scope of the State Finance Commission through an additional responsibility in its Terms of Reference, to assess the extent of regional imbalance in the state and propose policy recommendations to address the same.