Forests| Madhya Pradesh| Uttarakhand| Himalayan States| Biodiversity
The forest rich states of Madhya Pradesh, Uttarakhand and other Himalayan states maintain large areas of the forests. These forests conserve our biodiversity and provide water to our rivers. The also absorb carbon from the air, which prevents the global warming. But these states are suffering because much of their land is captured by forests and they cannot use this land for industrialization and habitation. Thus, these states are suffering in order to provide biodiversity, carbon sink and other services to the rest of the country.
The same is the situation with Ganga. Uttarakhand has the head of the Ganga. Uttarakhand wants to establish Hydropower plants so that it can generate revenue from the hydropower plants.
But this would lead to loss of biodiversity, water quality and spiritual values of the Ganga and therefore impact rest of the country negatively. Therefore, the Government of India does not give permission to build the many Hydropower plants that Uttarakhand would like to build. In this way Uttarakhand is foregoing benefits from Hydropower in order to provide benefits of the Ganga to rest of the country. These states therefore are rightly demanding that they should be compensated for the services they are giving to the rest of the country.
Finance Commission| Central Government| Devolution| Grants
The payment to the states is mainly done today through the Finance Commissions. The revenue collected by the government is first credited to the account of the Central Government and the Central Government transfers a fixed share of this money to the states through a mechanism called devolution. The Central Government establish a Finance Commission periodically in order to determine what should be the formula for this devolution. This Commission recommends how much money should be given to each of the states.
The Finance Commissions were previously also giving special grants for special purposes to specific states. For example, if Jammu and Kashmir is affected by terrorism, then Finance Commission can give a special grant to Jammu and Kashmir over and above the amount it gets through from devolution. The present formula of devolution is based basically on population and its area. If we want that the devolution should also taken to account the services of forests and Ganga provided by these states, than we have to create a forest- and Ganga index.
The devolution for the states having more forests must be increased and the devolution for the states having less forests should be reduced. The same for the Ganga. Devolution to those states protecting the Ganga should be increased and those who are using the Ganga should be reduced. In this manner we can request the Finance Commission to change the formula of devolution. But in order to do this we have to make a very robust and strong index which would be acceptable to all the states because the amount received by the states will change according to this formula.
Money| Grants| Ganga| Environment| devolution Formula
The second method for getting money is from grants. We could request the Finance Commission to give special grants to states like Madhya Pradesh which has very large area under forest and to Uttarakhand which is protecting the Ganga. Here the difficulty is that we do not have credible assessment of what is the value of the services being provided by the forest rich states like Madhya Pradesh to the rest of the country; or what is the value of the benefits from the Ganga that Uttarakhand is providing to rest of the country? Therefore in order to take this matter forward it is necessary that we create a robust valuation of the services provided by these states to the rest of the country. Then we can make a representation to the Finance Commission to either change the devolution formula according to these index or to provide special grants to these states. We need to do more homework to succeed in this direction.
