Puducherry, three southern states oppose Finance Commission ToR

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Thiruvananthapuram | Published: April 11, 2018 5:09:35 AM

Protesting a “conspicuous bias” which they believe has been built into the terms of reference (ToR) of the 15th Finance Commission (FFC), four southern states on Tuesday demanded that the ToR be reframed in keeping with the constitutional principle of federalism.

Puducherry chief minister V Narayanasamy, V Narayanasamy, puducherry, torPuducherry chief minister V Narayanasamy. (PTI)

Protesting a “conspicuous bias” which they believe has been built into the terms of reference (ToR) of the 15th Finance Commission (FFC), four southern states on Tuesday demanded that the ToR be reframed in keeping with the constitutional principle of federalism. The FFC’s award will be valid for the 2020-25 period.

The latest Finance Commission has been asked to pay heed to the “continuing imperative of the national development programme including New India -2022” and the impact of the previous commission’s (liberal) award to states on the Centre’s finances (The 14th Commission had hiked the tax devolution to states to 42% of the divisible pool, up from 32% previously). While this is being interpreted by these states as a signal to the FFC to trim the devolution, what frets them the most is the fact that the commission will use the population data of 2011, instead of 1971, to compute the inter se shares of states from the central tax kitty.

Also, these states are opposed to inclusion of the Centre’s policies and programmes, including its flagship schemes, direct benefit transfers, digital economy, ease of doing business, sanitation etc among the performance-based incentives for states and consider the commission’s mandate to have a critical look at the state governments’ “populist measures” as an infringement upon their autonomous political space.

Inaugurating a conference of finance ministers of Kerala, Karnataka, Andhra Pradesh and Puducherry in Thiruvananthapuram, Kerala chief minister Pinarayi Vijayan said it was widely feared that the ToR framed by the Centre would prevent the commission from fulfilling its constitutional responsibility. He said the ToR was unprecedented in asking the commission to consider proposing performance-based incentives beyond those relating to fiscal responsibility, population and devolution to local bodies. “This reflects the viewpoint and ideological inclinations of the central government and are attempts to micro-manage the the fiscal domain of states,” he said. Andhra Pradesh finance minister Yanamala Ramakrishnudu said the state — whose strident demand for special category status has been turned down by the Narendra Modi government, forcing the ruling TDP to walk out of the National Democratic Alliance — said the state was against ToR ‘unilaterally’ stipulated by the Centre without consulting states and called for discussions to re-frame it.

Puducherry chief minister V Narayanasamy said the conference would be an ‘eye opener’ for the Union government. He came down heavily on the ToR and the commission being tasked with defining “populist schemes” run by the states. “They (the Centre) wants to impose (various things) on states in the name of the Constitution, but actually infringe on the powers of the states,” he added. Among the southern states, Kerala and Andhra Pradesh also have to worry about a potential removal of revenue-deficit grants by the commission, as these are among eleven states currently having this facility.

Representing Karnataka, agriculture minister Krishna Byre Gowda said his state fully supported views of the other southern states. Karnataka was of the opinion that all progressive states, including perhaps all the southern states, have been ‘disincentivised’ by means of the ToR, he said.

Tamil Nadu and Telangana governments were not represented in the conference.

(With agency inputs)

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