Terms of reference in 15th Finance Commission flawed: Southern states

Thiruvananthapuram, April 10

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Three non-BJP-ruled southern states and Union Territory Puducherry on Tuesday came out against the terms of reference (ToR) stipulated by the Centre in the 15th Finance Commission for devolution of funds to states.

At a conclave of Finance Ministers of southern states here, Kerala, Karnataka, Andhra Pradesh and Puducherry opined that ToR were in contradiction to the principles of federalism enshrined in the Constitution and also would result in revenue loss to performing states.

Among other things, they also opposed the ToR recommendation to use the 2011 census to calculate population for allocation of union tax revenue in place of 1971 census, which was used by previous Finance Commissions.

However, AIADMK-ruled Tamil Nadu and TRS-ruled Telangana opted out of the conference, hosted by Kerala to discuss issues of common concern with respect to the 15th Finance Commission.

Briefing reporters on the deliberations of the conclave, Kerala Finance Minister TM Thomas Isaac said a similar conference would be held at Visakhapatnam either in April-end or May first week to finalise a memorandum seeking changes in the ToR.

The memorandum would be submitted either to the President or to 15th Finance Commission Chairman, he said.

On the outcome of Tuesday’s meet, he said the states, which participated, came together on several issues.

They were of the view that there was an attempt to reduce the Centre’s share to states through the 15th Finance Commission, he said.

“If this is allowed to succeed, states would become a glorified muncipalities,” Isaac added.

The 15th Finance Commission was expected to visit the state in May, he said to a question. He also said the conclave was the beginning of a debate on Centre-State relations.

Inaugurating the conference, Kerala Chief Minister Pinarayi Vijayan said the heated debates that followed appointment of the Commission was unprecedented because of the ‘conspicuous bias’ in-built in the ToR of the new commission.

It was widely feared that the ToR framed by the Central Government would prevent the Finance Commission from fulfilling its constitutional responsibility, he said.

“Therefore, it is only proper for all of us to appeal to the Union Government to reframe the terms of reference of the 15th Finance Commission,” Vijayan added.

Vijayan said introduction of GST in the country has resulted in erosion of fiscal autonomy of the states. — PTI

‘Attempt to cut Centre’s share to states’ 

• They have opposed the recommendation to use the 2011 census to calculate population for allocation of union tax revenue in place of 1971 census, which was used by previous Finance Commissions
• They were of the view that there was an attempt to reduce the Centre’s share to states through the 15th Finance Commission
• They expressed apprehension that the ToR framed by the Central Government would prevent the Finance Commission from fulfilling its constitutional responsibility

No inherent bias, says Jaitley

• FM Arun Jaitley on Tuesday said there is no inherent bias or mandate in the terms of reference of the 15th Finance Commission that could be construed as discriminatory against the states which have made good progress in population control
• The ToRs rightly balance both the ‘needs’ represented by latest population and ‘progress towards population control’ very well,” he said. He said a needless controversy was being sought to be created that the terms of reference of the Commission were loaded against any particular region of the country