Hyderabad: Representatives of four states and two Union territories on Monday jointly demanded changes to the 15th Finance Commission’s (FFC’s) terms of reference (ToR).
At a conclave in Hyderabad, finance ministers from Punjab, West Bengal, Andhra Pradesh, Kerala, Delhi and Puducherry drafted a memorandum to this effect, which they plan to submit to the President. This is the second such meet-up to discuss the impact of ToR on fiscal federalism.
The ministers say the ToR that propose to use 2011 census data instead of the current 1971 census to decide revenue devolution will disadvantage them as they have controlled their populations better than northern states. The forum was initiated by the Kerala’s left government.
The memorandum proposes an amendment to 4 (ii) of the ToR on “the constitutional position on the approval of grants to states in need to assistance” to restore the words “which are in need of assistance”.
West Bengal finance minister Amit Mitra said the ToR says “whether revenue grants may be given at all” and added that it violates Articles 280 (4) and 275 of the Constitution which deals with the Finance Commission. “This has never seen in the history of India,” he said.
The memorandum, which requests retaining data from the 1971 census as the criterion to decide on revenue devolution, also asks the President to delete portions which the states have found objectionable. In total, 13 amendments have been proposed in the draft memorandum.
Addressing delegates at the conclave, Puducherry chief minister V. Narayanaswamy said Puducherry is now neither a state nor a union territory. He said the central government must declare Puducherry as a “man or woman” and to not “treat it as a transgender” with regard to funding and tax devolution. “The central grant to Puducherry has been just Rs576 crore from the last five years,” Narayanaswamy claimed.
West Bengal’s Mitra said resistance to the Finance Commission is vital, as the ToR is in violation of fundamental constitutional values. “States are facing massive revenue deficits. I also want to highlight the non-payment of funds by the centre. West Bengal has not received Rs9,958 crore and we are forced to borrow from the market to keep our basic government initiatives running,” he added.
During the meeting, Narayanaswamy also raised the point that the ToR should contain a paragraph to include provisions for union territories also. This was also supported by Delhi deputy minister Manish Sisodia, who said that the “spirit of federalism” was violated by the 15th Finance Commission.
Andhra chief minister N. Chandrababu Naidu, who attended the meeting along with state finance minister Yanamala Ramakrishnudu, said states which are performing poorly must be uplifted, but not at the cost of progressive states. Censuring the Centre, he stated the central government is borrowing a lot of money, but is not allowing states to do so.
“How is this fair? We must stand up and prevent the significant hardship that states will face if the 15th Finance Commission will be put in place,” Naidu said.