The classification of centrally-sponsored schemes was increasingly becoming complex and messy.
It would be inappropriate to penalise efficiency if the Finance Commission doesn’t reward achievements and success of individual states, chairman of the 15th Finance Commission, N K Singh, said at an event organised by the Bombay Stock Exchange and the India Development Foundation in Mumbai on Saturday. The classification of centrally-sponsored schemes was increasingly becoming complex and messy. Successive finance commissions tried to harmonise two important contradictory features — equity and efficiency, he said. “Equal levels of taxation entitles citizens to equal quality of services from the state. The feature of equity, therefore, has been dominant and needs to be combined with efficiency,” he said.
On Centrally-sponsored schemes, Singh added that over a period, the 7th schedule has become a malleable entity due to changed entries by successive governments. Referring to the NREGA, Right to Education and the current government’s Ayushman Insurance scheme, he said, “The classification of large number of centrally-sponsored scheme is increasingly more complex and increasingly more messy.”
The challenge for every Finance Commission is to harmonise the contradictions between efficiency and equity, he said. The weightages for determining the allocation of funds to states have varied dramatically over the past two decades, he said.
The terms of reference of the 15th Commission mandates that the Commission uses the 2011 census data for the population criteria. “The terms of reference does say that if we use population in any manner, we should go by the census of 2011. It doesn’t talk about using any mix of earlier census figures, as was done by earlier Commissions. It doesn’t entail us to assign weightage to population,” said Singh.
Singh’s observation comes in the backdrop of the recent controversy on the terms of reference of the Commission, which has upset many Southern states.
The use of the 2011 population data this time rather than the 1971 census data, which many Commissions had taken into account and rewarding better performing states has led to states like Karnataka, Kerala, Tamil Nadu and Andhra Pradesh complain that they have made strides in areas like population control but are losing out to the North because of the change in the terms of reference of the Commission.
In another session, Assam minister, Himanta Biswa Sarma, said that taxpayers of North East are paying the same taxes as the rest of the country. “Still, why there is inequality in their life? If the people of Karnataka can access Ayushman Bharat, why can’t people of Assam access it as we are paying the same tax. All the three lists in the 7th Schedule needs a relook,” said Sarma.