4 southern govts in sync, allege North bias on tax sharing
Kerala, K’taka, Andhra, Puducherry allege terms of reference of 15th finance commission not fair
THIRUVANANTHAPURAM: In an unprecedented move, finance ministers of three southern states and one union territory came together on Tuesday, denounced the 15th Finance Commission’s formula for sharing of revenue between the Centre and the states and decided to form a pressure group to oppose what they termed ‘anti-federal’ policies of the BJP-led NDA government.
The meeting in Thiruvanthapuram was attended by Puducherry CM V Narayanaswamy who also holds the finance portfolio, Andhra Pradesh finance minister Y Ramakrishnadu, Karnataka agriculture minister Krishna Byre Gowda and Kerala finance minister Thomas Issac. The finance ministers of Tamil Nadu and Telangana skipped the event. Puducherry and Karnataka are ruled by Congress governments and Andhra by the TDP, which recently exited the NDA. The finance ministers told the media after the meeting that changes in the terms of reference (ToR) of the commission would adversely affect the southern states and said they will form a bloc to carry forward their fight. They said they shouldn’t be penalised for implementing policies of the union government.
The ToR recommended that the 2011 census be used as the benchmark for allocating funds to the states compared to the 1971 census used earlier. The share of Tamil Nadu, Kerala, Andhra Pradesh, and Karnataka in the population declined from 22% in 1971 to 18.2% in 2011 . The ToR also reduced the weightage for fiscal discipline. The southern states claim that these skew allocation of central funds in favour of states with large populations like UP and Bihar.
The recommendations of the 15th Finance Commission come into effect from April 1, 2020.
In a statement, finance minister Arun Jaitley termed the controversy over the recommendations “needless”. He added that the commission’s recommendations are based on an assessment of the needs of the states (based on population) and “Income Distance” (a measure of relative poverty) and that, as a result, more resources go to poorer states “which need additional funds for providing education, health, and other services to the people” which these states might otherwise not be able to provide.
Puducherry CM Narayanaswamy, who also holds the finance portfolio, said the union government’s policies were forcing some of the states to revolt against it. Kerala minister Thomas Issac claimed his state stood to lose at least ~20,000 crore if the new terms of reference are used.