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The 15th Finance Commission will seek not to penalise those States that have achieved success in terms of improved demographic management and on other development parameters.
“It should be the endeavour of the Commission to ensure that better performers are helped to perform even better, while those who have lagged behind in the mainstream development are helped to come up to national average,” NK Singh, Chairman, 15th Finance Commission, told newspersons, after deliberations with the Tamil Nadu government.
CM’s plea
Singh was responding to concerns of Tamil Nadu Chief Minister Edapaddi K Palaniswami who said before the Commission that the present trend in transfer of resources – of rewarding those who use resources inefficiently and do badly, and punishing those who use resources efficiently and do well – has to be reversed.
On the Tamil Nadu government’s request to adopt the population criteria of 1971 and not 2011, Singh said that even States like West Bengal, Odisha and Punjab have expressed similar requests but it is in the Commission’s Terms of Reference (ToR).
The Commission has no say in formulation of ToR, and it is completely neutral between demands of the Centre and the demands of State governments. This is the tradition that ‘we are privileged’ to have inherited and it is the firm resolve of this Commission to continue this in the 15th Finance Commission as well, said Singh on the objections to ToR by the Tamil Nadu government.
Palaniswami said that Tamil Nadu is the only State that has seen its share in devolution decline in every single Finance Commission since the 9th. The State always ended up with a reduced share of devolution, leading to a crisis of confidence in the polity, and among the people, in the core institutions of fiscal federalism.
“People of Tamil Nadu are looking to the 15th Finance Commission to undo the unfair and unscientific treatment this State received from the 14th and earlier Finance Commissions,” he said. The 14th Finance Commission has erred seriously in making its projections relating to Tamil Nadu, which had a debilitating effect on the State’s fiscal stature, he said. The State should be compensated for revenue loss faced due to unfair recommendations of 14th Finance Commission, the Chief Minister added.
“We have taken serious note of this concern of the State government,” Singh said.
Palaniswami said Tamil Nadu had not benefited from increase in share of Central taxes from 32 per cent to 42 per cent by the 14th Finance Commission because of the drastic cut in the horizontal share among States. Instead, Tamil Nadu lost ₹6,000 crore a year in the 14th Finance Commission alone. Tamil Nadu was the eighth State with which the Commission had discussions so far. The Commission will give its recommendations by October 2019, Singh said.
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