Kerala CM Leads Protest Against Centre's Policies, Alleges Discrimination
Kerala CM Vijayan protests against Centre's policies, alleging bias and hindering state progress.
Photo by Jakub Żerdzicki
Kerala Chief Minister Pinarayi Vijayan led a day-long 'Satyagraha' organized by the Left Democratic Front (LDF) on 12 January 2026, against the BJP-led Union government's policies. Vijayan described it as a fight for survival due to alleged discrimination and denial of rightful financial resources to the state. He accused the Centre of adopting a biased attitude towards Kerala and hindering its progress.
Vijayan refuted Union Home Minister Amit Shah's claims, stating that Kerala's tax share has decreased during the 15th Finance Commission period compared to the 14th. Meanwhile, Leader of the Opposition V.D. Satheesan criticized the LDF, stating they cannot collaborate with them on any protest.
Key Facts
Satyagraha date: January 12, 2026
Organized by: Left Democratic Front (LDF)
Allegation: Centre discriminating against Kerala
Kerala's tax share: Dipped during 15th Finance Commission
UPSC Exam Angles
GS Paper II: Federal structure, devolution of finances and challenges therein
Connects to constitutional provisions related to Finance Commission and Centre-State financial relations
Potential question types: Statement-based, analytical questions on fiscal federalism
Visual Insights
Kerala's Fiscal Situation: Key Indicators
Map highlighting Kerala's economic indicators and financial challenges, including revenue deficit and dependence on central grants.
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More Information
Background
The debate over fiscal federalism in India has deep historical roots, tracing back to the colonial era when revenue sharing between the central government and provinces was a point of contention. Post-independence, the Finance Commission was established under Article 280 of the Constitution to recommend principles governing the distribution of tax revenues between the Union and the States. Over the decades, various Finance Commissions have redefined these principles, considering factors like population, area, infrastructure development, and fiscal discipline.
The Gadgil-Mukherjee formula, used before the 14th Finance Commission, was a significant milestone in this evolution. States have often voiced concerns about perceived biases in resource allocation, leading to periodic demands for greater financial autonomy and a more equitable distribution of central taxes.
Latest Developments
In recent years, the debate surrounding fiscal federalism has intensified due to several factors. The implementation of Goods and Services Tax (GST) has altered the revenue dynamics between the Centre and States, with States relying more on compensation from the Centre for any revenue shortfall. The COVID-19 pandemic further strained the fiscal positions of both the Union and the States, leading to increased borrowing and debates over resource allocation.
The 15th Finance Commission's recommendations, covering the period 2021-26, have been a focal point, particularly regarding the criteria for horizontal distribution of taxes among States. Looking ahead, there is an expectation for greater dialogue and consensus-building between the Centre and States to address the evolving challenges of fiscal federalism and ensure equitable and sustainable development across the country.
Practice Questions (MCQs)
1. Consider the following statements regarding the Finance Commission in India: 1. It is a constitutional body established under Article 280 of the Constitution. 2. Its recommendations are binding on the Union Government. 3. The Fifteenth Finance Commission recommended maintaining the share of states in the divisible pool of taxes at 41%. Which of the statements given above is/are correct?
- A.1 only
- B.1 and 3 only
- C.2 and 3 only
- D.1, 2 and 3
Show Answer
Answer: B
Statement 1 is correct as the Finance Commission is a constitutional body under Article 280. Statement 3 is correct as the 15th Finance Commission recommended maintaining the share of states at 41%. Statement 2 is incorrect as the recommendations of the Finance Commission are advisory in nature and not binding on the Union Government.
2. In the context of Centre-State financial relations in India, which of the following taxes is/are levied and collected by the Union but assigned to the States? 1. Taxes on the sale and purchase of goods in the course of inter-state trade or commerce. 2. Taxes on consignment of goods (whether the consignment is to the person making it or to any other person), where such consignment takes place in the course of inter-state trade or commerce. Select the correct answer using the code given below:
- A.1 only
- B.2 only
- C.Both 1 and 2
- D.Neither 1 nor 2
Show Answer
Answer: C
Both the taxes mentioned are levied and collected by the Union but assigned to the States as per Article 269 of the Constitution.
3. Which of the following statements accurately reflects the historical evolution of fiscal federalism in India? A) Pre-independence, revenue sharing was solely determined by the provinces with minimal central intervention. B) The Gadgil-Mukherjee formula marked a shift towards greater weightage for fiscal capacity in resource allocation. C) The establishment of the Finance Commission aimed to reduce the financial autonomy of states. D) The Goods and Services Tax (GST) has had no significant impact on Centre-State financial relations.
- A.A
- B.B
- C.C
- D.D
Show Answer
Answer: B
The Gadgil-Mukherjee formula did mark a shift towards giving greater weightage to fiscal capacity and needs of states in resource allocation, compared to earlier approaches.