Row over terms of reference: 15th Finance Commission forms panel to quell controversy

By: | Published: May 10, 2018 5:45 AM

In a statement on Wednesday, the finance ministry said the advisory council’s functions will be “to advise the commission on any issue or subject related to the ToR of the commission, which may be of relevance”.

15th finance commission, 15th finance commission controversy, ToR The NK Singh-led 15th Finance Commission (FC) on Wednesday sought to quell a raging controversy over the strong opposition from some states to its terms of reference (ToR). (Reuters)

The NK Singh-led 15th Finance Commission (FC) on Wednesday sought to quell a raging controversy over the strong opposition from some states to its terms of reference (ToR) that allegedly militate against those that have performed well on population control, by setting up a six-member council to “advise and assist” it on the ToR and “help in broadening the commission’s ambit and understanding”.  The council comprises Arvind Virmani, former chief economic advisor in the finance ministry; Surjit S Bhalla, part-time member of the Prime Minister’s Economic Advisory Council; Sajjid Chinoy, chief India economist at JP Morgan; Neelkanth Mishra, managing director and Credit Suisse India economist and strategist; Sanjeev Gupta, former deputy director (fiscal affairs) at the International Monetary Fund; and Pinaki Chakraborty, professor at NIPFP.

However, the council’s role is advisory in nature, and it can’t tweak on its own the ToR of the commission. Any change in the ToR has to be made by the Centre with the assent of the President. The setting up of the council by the commission will also serve to ease pressure on the Centre, which has been accused of sabotaging cooperative federalism through “faulty” ToR. Some states have claimed that the progressive ones stand to lose if the commission follows its ToR and takes the 2011 census as the basis for the devolution of central funds, instead of 1971, that was adopted earlier.

However, both the Prime Minister and the finance minister, and even some analysts, have already termed the allegations frivolous and misplaced. In a statement on Wednesday, the finance ministry said the advisory council’s functions will be “to advise the commission on any issue or subject related to the ToR of the commission, which may be of relevance”. It will help prepare any research study which would enhance the commission’s understanding on the issues containing in its ToR; and to help broaden the commission’s ambit and understanding to seek best national and international practices on matters pertaining to fiscal devolution and improve the quality, reach and enforcement of its recommendations.

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