15th Finance Commission will be fair, reasonable, says its chief

The 15th Finance Commission today said it was not against any state and would come out with a fair, rational and reasonable decision on devolution of funds. The assertion comes amid apprehensions raised by some non-BJP ruled states that the Terms Of Reference (ToR) of the commission would adversely affect them. The commission was committed to providing a fair, rational and reasonable decision on the process of devolution of funds between the Centre and the states, its Chairman N K Singh told reporters here. Singh earlier held a meeting with Kerala Chief Minister Pinarayi Vijayan, his ministerial colleagues and officials besides leaders of other political parties and representatives from trade and industry. Kerala had last month convened a meeting of the Finance Ministers of southern states to jointly take up the issue related to ToR with the Centre. Ministers from Karnataka, Telegana and Puducherry attended the meeting where Kerala alleged that some of the ToR ran against the spirit of federal structure and the countrys Constitution. Besides, a conclave of Chief Ministers and Finance Ministers of various states, including Kerala, held in Amaravati in Andhra Pradesh on May 7 had noted that the ToR posed a threat to the economic independence of the states. It made a strong pitch for assured devolution rather than discretionary devolution while suggesting at least 13 amendments to the ToR. Referring to the objection raised by Kerala and other states over ToR, Singh said We are in no way responsible for ToR. We are the recipient of the ToR and not the creators. But, having this ToR, the commission was committed to certainly addressing it, but not necessarily accepting all of the terms, Singh said. On the concerns of Kerala, Singh said We have taken note of them and we will address. He said the commission had already held its sitting in Arunachal Pradesh, Assam and Haryana. Singh lauded the performance of Kerala government in the fields of education, health, social development in areas like human index and high per capital income. The state government is committed to providing a high quality governance, Singh added. However, he said Keralas economy had been affected as it had to spend a major portion of its revenue toward salary and pension of the government employees and stressed the need to improve the functioning of the public sector undertakings. On the ToR recommendation of using the 2011 census to calculate population for allocation of central tax revenue in place of the 1971 census, Singh said there was a provision to provide incentives (Funds) to those states that had performed well when 2011 census was taken as the baseline. Speaking after submitting a memorandum to the commission, Vijayan said the Centres share to Kerala has to be increased as the state has made huge investments for development of infrastructure. With respect to the devolution of resources, we therefore request that vertical devolution be raised to 50 per cent from the 42 per cent awarded by the 14th Finance Commission, he said. Vijayan wanted the Commission to unify the grants sanctioned by the Centre to states. The fiscal rebalancing efforts should not be asymmetric and adverse in their impact on the fiscal space of states, especially when the major responsibilities regarding social and economic development were the responsibility of the states, he said. I am sure that you will agree that real fairness and equity in the matter of devolution of resources to the states is essential to the unity of our nation, the memorandum said. The recommendations regarding the devolution of resources by the Commission assumes significance in the current environment, in which the finances of States have seriously been affected by demonetisation and the Goods and Services Tax (GST), Vijayan said. Further, the rising share of surcharges and cess in central revenues had resulted in shrinking the divisible pool of revenues to states, he said. A memorandum submitted by the Kerala Pradesh Congress Committee submitted that some items in the ToR were against the spirit of the Constitution and fiscal autonomy of the state and Central-State financial relations. This would adversely affect the harmonious relationship between the Union and the states, it said. This is an unhealthy change aiming at centralisation of fiscal powers in the hands of union government and rejecting fiscal autonomy and independence of States guaranteed by the Constitution, it charged. The commission would visit Kochi Metro and some civic body institutions in Kochi and Thrissur tomorrow.