Southern states in India with higher socio-economic development should put forward their expectations regarding tax devolution to the Finance Commission, but also acknowledge the role of free labour and capital mobility in their progress, Finance Minister Nirmala Sitharaman said on Friday.
"All southern states will have to put across their developmental indicators over the years. They will have to be measured differently as per their developmental indicators -- incentivised in some fashion, or not discouraged," Sitharaman told NDTV's Editor-in Chief Sanjay Pugalia.
Tax devolution may become a contentious issue as the 16th Finance Commission—a constitutional body—is slated to make its recommendations public by October next year, covering an award period of five years from April 1, 2026.
Some southern states, run by non-NDA parties, have expressed concerns over a probable decline in their share of revenues due to better-managed population growth relative to states in the north and east.
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Sitharaman stressed on the fact that southern states (i.e. Tamil Nadu, Kerala, Telangana, Karnataka and Andhra Pradesh) have benefitted from the free movement of labour and capital in the country.
"Few states in the south should talk to Finance Commission to look at them with respect to their achievements. Developmental indicator of states must also be looked at, including the human indicators. We will have to do whatever it takes to bring the entire nation at the same level," the minister said.
She said migration due to jobs has come down with privatisation but called for states to frame policies that attract talent and investments.
She also cited initiatives like the Uttar Pradesh government's plan for drawing global capability centres (GCCs) in Noida that can provide job opportunities to local talent. "Enabling policy and legislative support will have to made within the states as well," she said.
Watch the full conversation here:
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