Rich state, poor state: Tax devolution by per capita income or population

Tax devolution shares, which threaten to create a north-south divide among states, may have more to do with per capita income, and not so much with population

The 16th Finance Commission may have to grapple with the issue of addressing grievances of the southern states, but, contrary to widespread perception, tweaking the population parameter may not be the ideal way to do so.

The share of southern states — Andhra Pradesh, Telangana, Tamil Nadu, Karnataka, and Kerala — came down to 15.8 per cent in total devolution of central taxes to the states when the 15th Finance Commission gave its recommendations in the second part of its report for 2021-22 (FY22) to FY26 from 19.78 per cent during the period of the 12th Finance Commission — FY06 to