Reframe UFC terms ofreference, says Pinarayi

Chief Minister Pinarayi Vijayan has demanded that the Centre reframe the terms of reference (ToR) of the 15th Union Finance Commission (UFC) and accused it of using the commission as a tool to impose its ideological and economic agenda on States.

Inaugurating a conclave of Finance Ministers of South Indian States held here on Tuesday to discuss the ToR of the commission, Mr. Vijayan said that reframing of the ToR was imperative for strengthening the federal structure and reinforcing the unity and integrity of the nation.

The commission’s role assumed special significance given the fact that the Centre had near-monopoly over the right to mobilise resources. This bias in the distribution of fiscal powers was more glaring since the introduction of the Goods and Service Tax (GST) which had led to further erosion of fiscal autonomy of the States. The commission’s foremost objective was an equitable distribution of financial resources.

The 15th commission’s recommendations assumed further significance since the States’ finances had received a double blow in the form of demonetisation and the GST. The freedom of the States to raise resources had been restricted by the introduction of the GST and it was further restricted by the equal division of taxes despite the recommendations of the Chief Economic Adviser that States be allocated a higher share.

The GST had taken away the right of the States to design their own special initiatives in resource mobilisation. They now have hardly any major tax left with them to make a difference to State resources.

Therefore, the vertical devolution should not be brought down from the 42% awarded by the 14th commission, he said and added that bringing down the population involved increased spending for the elderly and also for improving the quality of living, he said.

The blatant interventionism of the Centre finds dangerous expression in the statement that “the commission may also examine whether revenue deficit grants be provided at all,” he said.

Finance Minister T.M. Thomas Isaac presided.

Chief Minister of Puducherry V. Narayanasamy, Andhra Pradesh Finance Minister Yanamal Rama Krishundu and Karnataka Agriculture Minister Krishna Byre Gowda attended the meeting. Finance Ministers of Tamil Nadu and Telangana did not turn up for the conclave.