The Bharatiya Janata Party is dependent on the Janata Dal (United) of Bihar and the Telugu Desam Party of Andhra Pradesh for its parliamentary majority.
Demand for State-specific discretionary grants, or ‘special packages’, are back with a bang in public discussion
The positive aspect of single-party dominance being tempered by the presence of coalition partners that can act as a check if unitary trends surge cannot be underestimated.
Nevertheless, this is the time to test the hypothesis that when single-party dominance at the Union level fades, federal tendencies bloom and when a single-party majority under a strong leader at the Union level prevails, federal tendencies wilt
If a healthy federal structure is to be nurtured, the fiscal boundaries, principles of assignment of taxes, and the basis for grants have to be transparent and objective.
A federal setup can be asymmetric in a country that is characterised by linguistic, cultural, and economic diversity.
Constitutional provisions
Issues of asymmetry should be addressed by means of constitutional provisions that have both transparency and stability.
The Constitution has provisions that address the issues of specific States, or States that have a special status with regard to certain matters mentioned in the Constitution.
These provisions are covered, for instance, in Articles 371A to H
On the contrary, special packages are purely discretionary.
They may be need-based, but the need is not the proximate reason for granting a special package, which is an additional grant under Article 282, which falls under ‘Miscellaneous Financial Provisions’.
More often than not, they are the result of the bargaining power of some State-level political parties that can tilt the scales of parliamentary majority
That the outcome of an election can determine the fiscal distribution of national resources to a State or States goes against the grain of fiscal federalism (or, more correctly, of federal finance).
Some States may be justified in their demands for funds, but allocation has to be through the mechanism of the Finance Commission.
The Commission make recommendations regarding the distribution of a share of taxes collected by the Union to the States, and how this is to be distributed among the States, as per Article 280; and disbursement of grants to States in need of assistance, as provided in Article 275
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