‘Finance panel’s terms of reference undemocratic’, says Kerala Finance Minister

Kerala’s Finance Minister Thomas Issac on Thursday said that the terms of reference of the 15th Finance Commission (FC) were undemocratic and did not reflect the true spirit of the Constitution.

His comments come against the backdrop of a protest by Karnataka Chief Minister Siddaramaiah, who has said that the parameters of the 15th Finance Commission discriminated against the southern States.

‘What is populism?’

“The whole tenor of many of the terms of reference of the Finance Commission are undemocratic. For example, [there is] one asking the FC to examine how populist measures can be controlled. Now, who is to determine what is populism and what is not? These are political questions not to be left for the Commission to ask. Of course, there may be populist measures, but it is for the people [to decide] when they choose the representatives [being elected],” Mr. Issac told The Hindu.

He was speaking on the sidelines of the launch of his book Building Alternatives, the story of India’s oldest construction workers’ cooperative — the Uralungal Labour Contract Cooperative Society — published by the New Delhi-based LeftWord Books.

Mr. Issac also red-flagged the stringent parameters imposed on the transfer of resources by the present Commission.

These parameters were framed without consultation with the States.

“The terms of reference already predetermine what should be the outcome by suggesting that the Centre’s expenditure will be given priority. No Commission has done that so far,” he said.

However, Mr. Isaac disagreed with Mr. Siddaramiah’s charge that the Commission is discriminating against the southern States. He said, “Most of the north Indian States are relatively backward and, therefore, in any federal system of distribution, they should be given a special consideration. There is no debate on that. But there has to be a sense of proportion, too.”

The Finance Commission, he said, is ignoring the promise made in the 1977 population policy, which clearly notes that no State will be penalised for reduction in population when it comes to distribution of Central funds. “To change it all of a sudden in this manner, unless it is compensated in another way, would be calamitous,” he added.

The Kerala government has called a meeting of finance ministers of the southern States in Thiruvananthapuram on April 10 to discuss and arrive at a consensus on their response to the terms of reference of the 15th Finance Commission.

“We want the Financial Commission’s terms of reference to be given in the true constitutional spirit. The constitution does not envisage a conditional transfer; this to be made an instrument of imposing certain preconceptions about how finance is to be run in the country, no, that process decision should be made elsewhere not through the finance commission,” he added.