Whether the declaration sought by the Magrathea in respect of the 14 th Finance

Commission can and should be granted?

1. It is humbly submitted before the Honourable Supreme Court that the “Tadri Formula” which
was implemented by the union government on the recommendations of 14th Finance
Commission is constitutional and is not against the tenets of basic structure of the
constitution.
These recommendations form the basis of fiscal policy of the union and the Honourable
Court may exercise caution encroaching into the powers of the parliament. The new tax
formula is devised to expedite the developmental process and to achieve the pious goals
enshrined in the Preamble of the nation.
A. “Tadri Formula” is the part of fiscal policy of the Union.
2. In the instant case, the President of Vyalikaval in exercise of his authority under Article 280
of the constitution of Vyalikaval constituted 14th Finance Commission in the year 2021.
Subsequently in 2022 the commission published its report and recommended the “Tadri
Formula” for the devolution of union taxes among the states which was accepted by the
union in toto1 and followed all the necessary procedures given in the constitution for its
implementation.2
3. It is pertinent to note that the tax devolution is prescribed by the domain specific expert
member committee of Finance Commission which engaged with the states and relevant
stakeholders and took all necessary submissions from them before publishing the aforesaid
mechanism of tax devolution.3 It is an expert body of a non-political character. Thus, the
question of devolution of resources from the Centre to the States has been taken out of the
arena of political bargaining and entrusted to an objective body and the matter is to be
settled on merits and not on the basis of political horse-trading. 4 So it cannot be said that the
states were not given a chance to state their requirements in front of the commission.
4. Union’s approval of the same has been accentuated by former deliberations on these
recommendations by both the houses of the parliament and the ‘elected representatives’
only after taking all factors and welfare of the country into account assented to it and
subsequently it was sent to the President for his accent. Hence, it becomes part of the
economic policy of the government which will remain in force from 2022-27.

1
¶ 20, Moot Proposition.
2
¶ 1, Moot Clarification.
3
¶11, Moot Proposition.
4
M.P. JAIN, INDIAN CONSTITUTIONAL LAW 995 (6th ed 2010).
B. Supreme Court could not interfere with fiscal policy lest disturb separation of powers.

5. The Honourable Court has time and again iterated in the favour of Judicial Restraint to be
exercised when the fiscal policy of the government is involved. In Balco Employees Union
v. Union of India5 the court held that:
In democracy, it is prerogative of each elected government to follow its own policy.
Often a change in government may result in the shift in focus or change in economic
policies. Any such change may result in adversely affecting some vested interests.
Unless any illegality is committed in the execution of the policy or the same is
contrary to law or mala fide, a decision bringing about change cannot per se be
interfered with by the court. It is neither within the domain of the courts not the
scope of the judicial review to embark upon an enquiry as to whether a particular
public policy is wise or whether better public policy can be evolved. Not are the
courts inclined to strike down a policy at the behest of a petitioner merely because it
has been urged that a different policy would have been fairer or wiser or more
scientific or more logical. Wisdom and advisability of economic policies are
ordinarily not amenable to judicial review unless it can be demonstrated that the
policy is contrary to any statutory provision or the Constitution. In other words, it is
not for the courts to consider relative merits if different economic policies and
consider whether a wiser or better one can be evolved. In matters relating to
economic issues, the government has while taking a decision, right to “trial and
error” as long as both trial and error are bona fide and within limits of authority.
For testing the correctness of a policy, the appropriate forum is Parliament and not
the courts.

6. In case of M.P Oil Extraction v. State of M.P6 the court reiterated the same stance and
said that “ in matters of economic rights and policy decisions, the scope of judicial
review is limited and circumscribed. 7 In Bajaj Hindustan Ltd. v. Shri Shadi Lal
Interprises Ltd8the court declared that the interference of court in matters related to
economic policy of the government is unwarranted. Hence it is submitted that, it is a
matter of policy decision of the government which is not mala-fide or against any
constitutional provision. And the court could not encroach upon legislature’s powers.
C. “Tadri Formula” does not violate any constitutional provision.
7. “Tadri Formula” replaces the longstanding “Deekayshi Formula” the weights of which
were based on Income Distance, Total Area of the state, Forest Cover, Population and
Fiscal Discipline9. The law is a dynamic concept and it should change with time, 10 it
should have the ability to keep abreast of the emerging trends in social and scientific

5
(2002) 2 S.C.C. 333.
6
(1997) 2 S.C.C. 592.
7
Id.at 595.
8
(2011) 2 S.C.C. 640.
9
¶3, Moot Proposition.
10
State of Gujarat v. Mirzapur Moti Kureshi Kassab Jamat, (2005) 8 S.C.C. 534.
 advance and its willingness to readjust its postulates in order to accommodate with
those trends.11 Even though, this mechanism of tax devolution was in operation from
the first Finance Commission which was constituted in 1956, it failed to achieve
constitutional goals. Hence, there was a need for a change which culminated in the
introduction of “Tadri Formula”.
8. “Tadri Formula” distributes revenues on the following weights Ratio of Population,
Reduction of Total Fertility Rate, Average Per Capita Income growth and annual
increase in forest cover. The reasons for the same include incentivising states who took
active measures to reduce population growth, increased population growth, improved
infrastructure and increased forest cover.12 It is imperative from the part of the union to
prioritise states who took active measures to implement social welfare sche mes
effectively. This will result in improved morale of these states and will help avoid a
similar situation in India when the terms of reference set by its newly constituted
Finance Commission were pointing towards incentivising the low performing states.13
9. Vyalikaval has a terrible population growth problem which stems from high total fertility
rate which subsequently stems from low female literacy rate so in order to tackle all
these issues the economic policy is to be streamlined in such a way in order to attain
maximum efficiency.
10. It is pertinent to note that economic policy should not be myopic and there is a need of
seeing a bigger picture in this case. The largest states of the country were getting the
maximum share of union tax revenue since the time of independence, but the question
arises why even after 70 years of independence they are the most underdeveloped. This
points to the direction of ineffective implementation of social welfare schemes in these
states. The ineffective implementation stems from poor coordination and planning
among govt. departments and most importantly corruption. 14 As per the report of
Planning commission of India:
Independent studies show that corruption and poor governance lead to lower
growth and investment. The South Asian Human Development Report also makes
the point that low human development makes it easier for poor governance practises
to survive, leading to a vicious circle. Thus, good governance and accelerated

11
Deena v. Union of India, (1983) 4 S.C.C 645.
12
¶ 17, Moot Proposition.
13
Pallavi Nahata, Six states oppose terms of reference of 15th Finance Commission, BLOOMBERG QUINT, (Sept.
21, 2018, 06:25 PM), https://www.bloombergquint.com/politics/2018/05/07/six-states-express-dissent-over-
terms-of-reference-of-15th-finance-commission#gs.cbQBD9o.
14
Issues in Implementation of schemes in district level, IAS SCORE, (Sept. 21, 2018, 07:34 PM),
http://www.iasscore.in/topical-analysis/issues-in-implementation-of-schemes-at-district-level.
 human development are inextricably linked and indeed, governance forms the
bedrock on which gains in human development can be rapidly achieved.15
Hence, the fear of getting less revenue will make state governments to strive more
towards good governance which will in turn reduce corruption and will make
implementation of social welfare schemes in these states more effective.

11. The new formula is indeed a radical idea that will usher our country in a new era of
economic development. The critique that it might cause harm to the economy is not well
thought. In 1984, when Rajeev Gandhi became the Prime Minister of India. He
advocated the use of computers in govt. departments which was a very radical idea that
time, thousands of people protested against the government policy which they feared will
cause loss of jobs because of advent of computers. 16 Today we see computers
everywhere and it will be safe to say that no work today can be done without computers.
12. “Tadri Formula” will make an environment conducive for competition among the states.
There will be a new-found competition among the states for successful implementation
of their social welfare schemes because the revenue they’ll receive will depend on it. For
successful implementation of schemes, the states will have to take anti-corruption
measures which will help curbing corruption. The situation will be similar to the Swatch
Bharat Survey which the Government of India conducts every year, the objective of
which is to encourage large scale citizen participation and create awareness amongst
all sections of society about the importance of working together towards making towns
and cities a better place to live in. Additionally, the survey also intends to foster a spirit
of healthy competition among towns and cities to improve their service delivery to
citizens, towards creating cleaner cities. 17 If a state faulters and gets less revenue the
citizens will start asking question and will not be good for them in the next election.
Hence, the formula will take country in a new direction which will result in building of a
social welfare state and achieving of the pious goals enshrined in the Preamble.
13. The union is of the view that some big states will face problems initially and have made
provision for the same, a constitutional amendment has been made in Article 27618 by
which the earlier cap of VYR 10000 was removed which the state can levy as

15
Planning and Implementation Issues, PLANNING COMMISSION OF INDIA (Sept. 21, 2018, 06:56 PM),
http://planningcommission.nic.in/plans/planrel/fiveyr/10th/volume3/v3_ch5.pdf
16
Sheila Tefft, The Computer Revolution Comes to India- Sort of, THE CHRISTIAN SCIENCE MONITOR (Sept. 21,
2018, 08:13 PM), https://www.csmonitor.com/1989/0817/fcomp.html.
17
Swachh Sarvekshan 2018, MINISTRY OF HOUSING AND URBAN AFFAIRS (GOI) (Sept. 21, 2018, 8:44 PM),
https://www.swachhsurvekshan2018.org.
18
¶ 21, Moot Proposition.
 professional tax. And if a state wants to cover up for its lost revenue it can make a
legislation regarding the same. And in case of miscellaneous expenses or some natural
calamity the union will always assist the states by providing them with discretionary
grants.
14. It is safe to say that “Tadri Formula” do not encroach upon any constitutional provision
of Vyalikaval constitution. It however, envisages to bring about a mandate to build a
welfare state enshrined in Article 38 of the constitution. And since, it being part of
economic policy of the union the court should respect the convention and exercise
judicial restraint.