Answer:

Introduction:

India’s diversity is not just cultural but also economic, and the North-South divide encapsulates this disparity. Southern states, characterized by better governance standards, higher tax contributions, and more robust economic indicators, contrast sharply with some of the northern states, which lag in these areas.

Body:

Fiscal Implications

• The Public Affairs Index 2018 highlighted the governance disparity, with southern states like Kerala and Tamil Nadu ranking high in terms of fiscal management and justice, while northern states like Madhya Pradesh, Jharkhand, and Bihar ranked lower. 
• Southern states contribute significantly to the national economy but receive less in terms of central resource allocation, a point of contention that has been raised by political leaders from these states​​.
• Economic disparities are further exacerbated by the 15th Finance Commission’s terms of reference, which have been a recent point of contention. 
• Southern states argue that their fiscal prudence and demographic control are not adequately rewarded, leading to a situation where they subsidize the fiscal profligacy and higher population growth rates of some northern states​​.

Impact on Equitable Development

• This fiscal imbalance impacts equitable development across states. While southern states have leveraged economic reforms post-1990 to advance their development, northern states have not capitalized on these reforms to the same extent, leading to a widening gap in income and development standards. 
• The economic survey of 2015-16 pointed out the rising spatial dispersion in income across India, particularly along the North-South divide, despite the more porous borders within the country​​.

Proposed Measures to Address Fiscal Imbalances

To address these fiscal imbalances, several measures can be proposed:

• Revisiting Resource Allocation Formulas: The central government could consider revising the formulas used by the Finance Commission to allocate resources among states, ensuring that contributions to the national exchequer and efforts in population control and governance are adequately rewarded.
• Promoting Fiscal Federalism: Enhancing the fiscal autonomy of states by allowing them more leeway in generating their revenues and spending according to their priorities could help reduce imbalances.
• Encouraging Skill and Infrastructure Development: Targeted investments in skill development and infrastructure in lagging states could help them attract investment and improve their fiscal situation.
• Creating Platforms for Inter-State Collaboration: Encouraging states to share best practices in governance, fiscal management, and development initiatives could help reduce disparities.
• Adjusting to Demographic Changes: As demographic trends diverge, with the South aging faster than the North, policies need to adjust to these realities, focusing on healthcare, social security, and labor mobility.

Conclusion:

The North-South divide in India presents complex fiscal implications that affect equitable development across the country. Addressing these requires a nuanced understanding of the underlying issues and a cooperative approach between the central and state governments. By implementing targeted measures to address fiscal imbalances, India can ensure a more equitable development trajectory for all its states, harnessing the strengths of each region to build a more cohesive and prosperous nation.