Economic Indicators and Various Reports On It- GDP, FD, EODB, WIR etc

Dravidian Model of Governance: 10 Achievements of Tamil Nadu


From UPSC perspective, the following things are important :

Prelims level: Dravidian Model of Governance

Mains level: Fiscal Federalism

Dravidian Model of Governance


  • Tamil Nadu CM outlined the achievements of the ‘Dravidian Model’ government of the DMK, presenting them as blueprints for other states to follow.

Dravidian Model of Governance

  • Contribution to Indian Economy: Tamil Nadu’s contribution of nine percent to the Indian economy showcases the state’s robust economic growth.
  • GDP Ranking: Securing the second position in contributing to the Gross Domestic Product (GDP) of the nation, with a growth rate of 8.19 percent, surpassing the national average of 7.24 percent.
  • Inflation Control: The state has effectively controlled inflation, with rates falling to 5.97 percent compared to the national figure of 6.65 percent.
  • Export Preparedness: Topping the list of the Export Preparedness Index in the country, with a particular focus on leading in the export of electronic goods.
  • Industrial Investment Climate: Creating a favorable climate for industrial investment, elevating Tamil Nadu to the third position in the country from its previous rank of 14.
  • Education: Achieving the second position in the field of education and securing the first place in innovative industries.
  • Empowerment Initiatives: Prioritizing the welfare of women, young people, persons with disabilities, and marginalized communities, leading to significant improvements in their quality of life.
  • Scheme Implementations: Extensive distribution of assistance to people amounting to ₹6,569.75 crore, including initiatives like the Kalaignar Magalir Urimai Thittam, free bus travel for women, and healthcare schemes benefiting millions of citizens.

Discussion: Fiscal Federalism in India

Fiscal Federalism: Understanding the Context

  • Overview of Fiscal Federalism: Fiscal federalism delineates the financial powers and responsibilities among different levels of government.
  • Provisions Related to Centre-State Financial Relations: The Indian Constitution elaborates on tax distribution and grants-in-aid, supplemented by the role of the Finance Commission.
    1. Part XII of the Constitution: Details provisions regarding the distribution of taxes, non-tax revenues, borrowing powers, and grants-in-aid.
    2. Article 268 to 293: Specifically address financial relations between the Centre and States.
    3. Finance Commission (Article 280): Constitutional body responsible for recommending tax revenue distribution and fiscal discipline.
  • Challenges with Fiscal Transfers: Despite recommendations to increase devolution, there has been a reduction in financial transfers to states, posing challenges to fiscal autonomy.

Challenges and Concerns

  • Centralization of Fiscal Powers: The Union government’s increasing control over fiscal powers challenges state autonomy.
  • Erosion of State Tax Autonomy: Implementation of VAT and GST has diminished states’ ability to set tax rates independently.
  • Constraints on State Expenditure Flexibility: Conditional grants limit states’ discretion in allocating funds according to local priorities.
  • Uniform Fiscal Targets Neglecting State Variations: Uniform fiscal targets fail to address the diverse needs of individual states.
  • Impact of GST Implementation: The GST implementation has shifted tax burdens and reconfigured fiscal dynamics among states.

Steps towards Better Devolution of Finances

  • Re-examining Tax-sharing Principles: Finance Commissions should review tax-sharing principles to align with changing fiscal dynamics.
  • Redesigning Statutory Sharing of Indirect Taxes: Vertical and horizontal devolution mechanisms need re-evaluation to ensure equity and efficiency.
  • Calculating and Allocating Collection Costs: Methods for calculating and allocating collection costs should be devised to enhance tax efficiency.
  • Redesigning Grant Mechanisms: Existing grant mechanisms should be restructured to address evolving fiscal challenges.
  • New Institutional Structures: Establishing formal relationships between the GST Council and Finance Commission can enhance fiscal governance.


  • Tamil Nadu’s governance model, exemplified by Chief Minister Stalin’s comprehensive overview, underscores the state’s commitment to economic progress, social welfare, and inclusive development.
  • Despite challenges in India’s fiscal federalism, Tamil Nadu’s achievements serve as a beacon of hope, demonstrating the potential for states to thrive under effective governance models.
  • Addressing fiscal imbalances and enhancing cooperative federalism are imperative for ensuring equitable distribution of financial resources and fostering sustainable development across the nation.

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