15th fin panel’s resource sharing plan unfair: CM Pinarayi Vijayan

THIRUVANANTHAPURAM:Chief minister Pinarayi Vijayan said on Tuesday that the terms of reference of the 15th Finance Commission have created apprehension about the principles of fairness and equity in the distribution of national resources for development. He said that the state share of central resources should be increased from 42% (existing) recommended by the 14th Finance Commission.
Inaugurating the conclave of finance ministers of southern states, Vijayan said that states neither have the resources to fulfil their tasks (as laid down in the Constitution) nor do they have the right to raise such resources. “The present situation is not because of the action of the states, but is directly the consequence of the policies pursued by Centre,” he said.

The devolution of resources by the commission assumes further significance in the present environment as the finances of states have received a double blow in form of demonetisation and implementation of Goods and Services Tax (GST), he said. He added that for the state, the purchasing power and economic activity – particularly in traditional and cooperative banking sectors – were severely affected by demonetisation.

Vijayan said that the freedom of states to raise resources has been further restricted after the introduction of GST. “It was further restricted by the equal division of GST despite the recommendations of the chief economic adviser that states be allocated a higher share. GST has taken away the right of the states to design their own special initiatives in resource mobilization. They now have hardly any major tax left with them to make a difference to state resources,” he said.

With respect to the devolution of resources, vertical devolution should not be brought down from 42% awarded by the 14thfinance commission. “States have lost much of the space for manoeuvring after the introduction of GST and equal division of GST. In this context, raising the share of divisible pool from 42% may be considered,” he said.

Finance minister TM Thomas Isaac said that the terms of reference of the commission is contradictory in letter and spirit of the principles of federalism enshrined in the Constitution.

The government’s view received the backing of the opposition with Ramesh Chennithala extending full support in this matter. He said that Centre should have dialogues with states before finalizing the terms of reference as each state has its own peculiar nature. He said that the Centre cannot penalize states that have performed well in all sectors.