Actor Kamal Haasan has ignited the call of a South India united under Dravidian identity–a North-South divide–to dictate terms to the Central government. Among his other arguments is that Tamil Nadu is among the top states contributing to nation’s tax revenue. “Some say that (the Centre) is collecting taxes here (Tamil Nadu) and using it to develop north Indian states,” the actor wrote.
Prof. R. Vaidyanathan, financial expert with PGURUS, put out a videocast on the website to drill holes into this North-South debate which he believes is initiated by semi-literates. Over to Prof. Vaidyanathan (excerpts):
“This whole North-South thing of the last two months came into being after Finance Commission has been constituted.
First, what is South and North? South I can understand. What’s north? MP, UP and Bihar? What about Gujarat? Maharashtra? Orissa, Bengal? Punjab? Kashmir? To me the terms of reference are ill-defined.
“If at all, UP, Bihar, Bengal, Orissa have a lot to complain against south. South actually is extraordinarily exploiting these states. (Let’s remember) Freight equalization which was introduced in the 50s. In simpler terms (it meant), the coal which is produced in Bihar will be sold at the same price at Kanyakumari. That’s called freight equalization. In US, UK, most industries centre around the areas of these extractive industry. (In India), it was felt (freight equalization) the only way other parts of the country would develop.
“It was unfair to states, it was felt, particularly southern, which were not having much of these natural resources. Thus you had huge number of industries coming up in South. BHEL, Wipro, HMT, BEL, Large public sector undertaking were located in the South actually. Because of these, south had an advantage in engineering, education, as well as employment. If you remember, the dream of all graduates in the 60s was to join BHEL, BEL or HMT.
“Ashok Mitra, CPIM finance minister, brought out several publications, attacking this freight equalization, as the reason for the backwardness of Bengal, Bihar and Orissa. He wrote and the Government of India constituted a commission: it did concede freight equalization was an issue.
“Second issue, is nationalization of banks. South has huge numbers in banks: Canara Bank, Syndicate Bank, Corporation Bank etc. South had big strength in banks… compared to Bimaru states. If you go into 60s, 70s and 80s and even now, the credit deposit ratio is phenomenal, compared to UP, Bihar. An average deposit of Rs 100 by a UPite, the credit given (by southern banks) was Rs 80-85. But for the 100 rupees deposited in Tamil Nadu, The credit given would be somewhat around Rs 130-140. So the states like UP were exploited by the banking system to help states like Tamil Nadu and Kerala.
“In US, till recently, states had a significant amount of say in the banking sector. In US, banking has been a state subject. In India it has been a federal subject. As I remember, in the 70s if one were to shift funds from Texas to Arizona, if a huge amount of money is being shifted, then the state of Texas needed to be informed about it by the bank. CitiBank couldn’t open branches in cities other than New York or in boroughs. The point I wish to make is that finance being a federal subject in India, from Day One, the intention was to integrate the system. So the credit deposit ratio of the banking system, highly favoured the southern states.
“Kerala of course is separate matter. It became an appendix of Saudi Arabia, It was always known as money-order economy. Cut off the money order coming from Middle East, Kerala would be more pauper-ate than UP or Bihar actually. Its extremely subsisted on the mechanism of money order coming from, and now of course, in the form of Western Union and other things. Call it Western Union economy. As far as three other South States are concerned, they are even today heavily dependent on Central funds. Their education system, health system, all are better placed because of location of large number of these PSUs.
“A point everyone forgets that almost all the Prime Ministers of the country came from UP. I think we should really appreciate all the PMs coming from UP, they didn’t show any particular favour to UP. They have been more than accommodative, in terms of number. Let me give another example: MPs are decided on the basis of number of people in a location. Now South is much better in terms of matter of reduction of population growth rate. Actually, if numbers were to be decided on the basis of number of population, South will not be having these numbers of MPs actually. But in larger national interest, it was decided by members of parliament, consisting of UP, Bihar, Madhya Pradesh Rajasthan, not be a factor. They have been extraordinarily considerate. They could have insisted that as per our constitution, it should be population based. But they (decided) that southern or any state having better family planning shouldn’t be penalized.
“Tamil Nadu wanted 69 percent reservation as SC/ST and OBC. (If you include) Physically handicapped and others, it’s 71 per cent. It (Tamil Nadu) said 91 per cent of its population is backward class. 69 per cent was agreed by Centre, again by the same members of parliament from UP, Bihar, etc. Not only agreed, it was put under the 9th schedule (of Constitution) so it can’t even be contested in Supreme Court.
“Very interestingly, a state like Bihar if you take, a large number of southern persons became MPs from Bihar. So people from UP, Bihar, MP have been least parochial. One thing they always thought all this is India, so there is no need to be parochial and like other states who think they are.
“The linguistic formation of the states was a major blunder, in creating feelings like we are south we are north. Linguistic formation is an extreme irony died thousand times. The first state to get it and agitate was Andhra Pradesh. And now it has completely proved wrong by becoming two states! We should have divided ourselves on basis of economy, rivers etc.
“The point is, all these South-North talk is by elite only, not by common people. For instance if you go to Northern Karnataka, they have as much affinity with Maharashtra, in terms of language, food habits. People have large amount of commonality. They don’t have “you are north, we are south,” etc. It’s “tip of the tongue” English speaking elite. (They) Suddenly feel they are not getting adequate amount of importance.
“All are in the same boat. A small state like Haryana got 23-24 medals in Commonwealth Games. Size of the state is small, population is much smaller, other states should say why Haryana should get so many medals? Some in football, some archery. Every state has got its sources of strength. Kerala has got nurses al over the world. Plumbers, all over, are from Kendrapara, comprise 40-50 percent of the plumbers (in the country). You show me a non-Oriya plumber in Bangalore, Bombay or Chennai, So Orissa can say that all take our plumbers and exploiting us. This is not going to lead anywhere. Nobody is exploiting anyone. Except all political leaders are exploiting the public of this country.
“Regional chauvinism is not going to lead us anywhere.”
(Disclaimer: As said at the start of this article, this videocast has appeared in PGURUS. Newsbred reproduce it in text with due acknowledgment).
