Kerala Finance Minister TM Thomas Isaac said the southern States will continue their agitation against the terms of reference of the Fifteenth Finance Commission as they are concerned about losing out on devolution of taxes and not just incentives for population control.

“In the total award of the Finance Commission, more than 91 per cent will come from devolution of tax revenue, which will be based on the 2011 Census. Going by past trends, the incentives will account for only 2-3 per cent of the devolution,” he told BusinessLine .

“So how will the incentives compensate for the loss from tax devolution? It does not make sense,” Isaac said.

Apart from the criteria of population, Isaac said the terms of reference of the finance panel also indicate that more conditionalities may be put for transfer of funds to States.

“They will put in more and more stringent conditionalities on all States. It will be completely anti-States and anti-federal,” he said, adding that the southern States now want to have a national debate on the issue. Southern States including Kerala, Andhra Pradesh, Karnataka and Puducherry have said the terms of reference of the finance panel are skewed against States that have succeeded in curbing population as it will use the population Census data of 2011.

They already held one meeting in Thiruvananthapuram earlier this week and Isaac said they will have more discussions in Visakhapatnam and then in Delhi. “We welcome anyone from the Union government or the Finance Commission to join this discussion,” he said.

He, however, said the concerns will not be taken up at the meeting of the Goods and Services Tax (GST) Council, which has a specific mandate.

“A strange co-incidence is that all the States which have done well on the population front and will lose on funds are non-BJP ruled States, including West Bengal, Punjab, Odisha as well as the southern States,” he said.

Finance Minister Arun Jaitley and Prime Minister Narendra Modi have tried to allay such fears. “A baseless allegation is being made about the Terms of Reference of the 15th Finance Commission, being biased against certain States or a particular region,” the Prime Minister said on Thursday, adding that the Centre has suggested to the Finance Commission to consider incentivising States that have worked on population control. “Thus, a State like Tamil Nadu, which has devoted a lot of effort, energy and resources towards population control would certainly benefit,” he had said. Isaac said the specific reference to Tamil Nadu indicates the Centre’s apprehension that it could have a political impact.

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