Total Tax Revenue and Central Transfers to South Indian States: Analysis and Spending
As of my last update in August 2023, specific figures for total tax revenue collected from South Indian states like Tamil Nadu, Karnataka, Kerala, Andhra Pradesh, and Telangana, and the total amount the central government returned to these states over the past five years can vary from year to year. This variability is influenced by a wide array of factors such as changes in tax policies, economic performance, and central government transfers.
General Overview
Tax Revenue
Each state in India collects revenue from various sources, including State Goods and Services Tax (SGST), sales tax, income tax, and other state-level taxes. For instance, Tamil Nadu and Karnataka, due to their industrial and service sectors, are among the highest revenue-generating states.
Central Transfers
The central government provides funds to states through various means, such as Goods and Services Tax (GST) compensation, grants-in-aid, and tax devolution. The Finance Commission of India reviews and recommends the distribution of central tax revenues to states every five years.
Estimated Figures Pre-2023
Total Tax Revenue
Prior to 2023, the estimated figures for tax revenue collected from the South Indian states were as follows:
Tamil Nadu: Approximately 2.5 lakh crore (2021-2022) Karnataka: Approximately 1.5 lakh crore (2021-2022) Kerala: Approximately 1.25 lakh crore (2021-2022) Andhra Pradesh: Approximately 1.25 lakh crore (2021-2022) Telangana: Approximately 1.25 lakh crore (2021-2022)Central Transfers
The total amount transferred can range significantly. Estimates suggest that in the past five years, the central government’s transfers, including grants and tax devolution to these states, could collectively be in the range of 1.5 to 2 lakh crore annually, depending on fiscal policies and allocations made by the central government.
Modi Government’s Impact
Historically, tax compliance in these states has been poor, with many businesses engaging in cash transactions. However, since the arrival of the Modi government, there has been a significant shift in the allocation of funds states receive back. In the Congress era, states received a 32% share of central taxes. Modi, in the history of modern India, increased this share to 42%, as part of the recommendations by the Finance Commission.
Central and State Spending
While the central government is responsible for national projects such as national highways, railways, ports, central universities, educational institutes, gas subsidies, and medical facilities, the state share of this funding can be considerable. Here's a brief overview of some areas where the central government is heavily involved:
National highways Railways Ports Central universities Educational institutions like IITs, NITs, IIMs MEDICAL FACILITIES: Institutions like AIIMS AYUSHMANN YOJANA beneficiaries Gas subsidy and petrol subsidy (Ujjwala and Ujala Yojana) Airports and Udan Schemes Irrigation schemes Farm Insurance Nuclear, solar, hydel, and coal power plantsDefense, CBI, ED, Income Tax, Navy, IAF, BSF, DRDO, HAL, Ordnance Factory, Coast Guard, and Foreign missions are also borne by the central government. This includes various defense manufacturing zones.
State Spending and Accountability
There is a call for transparency and accountability in how states spend the money they receive. Previous governments are often criticized for not fully utilizing the funds they received, and there is a need for states to be more transparent in their spending.
To enhance this transparency, it is advisable to refer to official reports from the Ministry of Finance, state government budgets, and the latest Finance Commission recommendations. These figures are subject to change and require the most current data for accuracy.
For a comprehensive understanding of how states are managing and spending the funds, it is crucial to look at detailed reports and audits. This will help in ensuring that public resources are used efficiently and transparently.