Not fair: Finance Commission's terms of reference stray from propriety

Kerala Finance Minister Thomas Isaac

Kerala Finance Minister Thomas Isaac

Attacking the BJP-led NDA government, 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.

"Puducherry is not even included in the Finance Commission".

The Gulati Institute of Finance and Taxation here would function as the Secretariat of the Group of Ministers and prepare a draft memorandum that would be finalised at the Visakhapatnam meeting. According to the statistics available with the Centre, the population in south India went up just by 85 per cent, while in the BIMARU states in north India-Bihar, Madhya Pradesh, Rajasthan and Uttar Pradesh-had gone up by 144 per cent.

Kerala Finance Minister Dr TM Thomas Issac said southern states have reached a consensus on the issues affecting them in the TOR of the 15th Finance commission.

To this, Jaitley said the 14th Finance Commission had no specific mandate to use the 2011 data, and did so to capture demographic changes for a realistic assessment of the states. "State governments will have great difficulty if they are forced to cut down their popular programmes", Isaac said.

He added that the commission's recommendations are based on an assessment of the needs of the states (based on population) and "Income Distance" (a measure of relative poverty) and that, as a result, more resources go to poorer states "which need additional funds for providing education, health, and other services to the people" which these states might otherwise not be able to provide. "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. The ministers of Tamil Nadu, Karnataka, Andhra Pradesh and Puducherry have confirmed their participation, while Telangana is yet to confirm participation.


Isaac reiterated that the commission's ToR are undemocratic and in conflict with the federal structure.

However, a report in The News Minute said that Tamil Nadu Deputy Chief Minister O Panneerselvam, who also hold the finance portfolio, will skip the meeting. "We need more power". Together, the four southern states and Puducherry would lose ~80,000 crore.

"Also it's not right for the FC to determine populist schemes, as it's the right of the state government; it's a political decision that has to be taken while determining populist schemes", added Issac. Representing Karnataka, agriculture minister Krishna Byre Gowda said his state fully supports the views of other states. Stringent norms may be laid for borrowing and the States may be told to bring down the fiscal deficit to 1.7%, which would have a direct impact on the development initiatives of the States.

"At a time when the state is reeling under Rs.4 lakh crore debt, skipping this meeting is a very wrong move". Fearing Narendra Modi, the government of Tamil Nadu has taken this decision.

In his column, former finance minister P Chidambaram wrote, "the Central government has lit a fire".

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