Need to balance equity, rewarding efficiency: Singh

The terms of reference of the 15th Finance Commission would strike a balance between rewarding performance of States while taking care of equity, according to commission chairman N.K Singh. This comes in the wake of concerns that the terms would adversely impact the States that have performed better from a demographic point of view.

“We need to balance rewarding efficiency and taking care of equity. Both equity and efficiency need to be reconciled,” Mr. Singh said on the sidelines of an event.

“It will be the endeavour of the finance commission to have an appropriate reconciliation... if you look what weight has to be given to demography which is something left entirely to the commission’s judgement, equally there [are] terms of reference which [refer to] incentivising States [that] have achieved great success on demographic management and replacement rate of population,” he said.

Former finance minister P. Chidambaram had said the terms of reference of the finance commission were flawed and could adversely impact the southern states that have performed better.

‘No bias’

Mr. Singh clarified the commission did not have any bias for the Centre or for States. “We have to look both to the needs of the States and the Centre in a manner which is totally equidistant; we will then look at an arrangement [that] is appropriate in the distribution of these resources looking at the obligations [to] both the State and the Centre.” The commission has started deliberations with the States and aims to complete consultations with all States by the end of the financial year.

“Arunachal [Pradesh] and Assam... we have already done. Planning to go to Haryana between the May 3-5. Thereafter, we are planning to go to Kerala towards the end of May,” he said.

“Of course in some States elections are due…as they are taking place in Karnataka, we would like to go once the elections results are [out]… the new government settles down. Similarly, there are State elections in Rajasthan, Madhya Pradesh and Chhattisgarh; so we would like to do all these in a manner that does not disrupt the election schedule of these States. But it is our intention to cover all the States before the fiscal year,” Mr. Singh added.