`Centre using Finance Commission to promote its flagship programmes'

Alot of objections have been raised regarding the Terms of Reference for the 15th Finance Commission. KUNDAN PANDEY recently spoke to PRONAB SEN, Programme Director for International Growth Centre (IGC) India Programme, about the concerns that need to be allayed. Excerpts

The Terms of Reference (TOR) for the 15th Finance Commission (FC) have created enough controversy? Do you remember a similar controversy or objections for TOR in the past? There have been controversies in the past too, but this time the magnitude is high. This is a badly drafted TOR. The Constitutional requirement of FC, which is vertical and horizontal devolution of taxes, comes as third or fourth position in TOR. It should have been on the first position.

Few states have objected to using 2011 Census data for disbursing tax revenues. What is your take on this? In my view, the government's decision about going with Census 2011 is right. Ultimately, this is not about states, but about citizens. Why should a person in Bihar be treated differently from a person in Kerala? When you use Census 1971, you are going by the population of state and not the person. To my mind, this is the violation of our Constitution. So, this is a step in the right direction. There are several other issues in ToR that are not right but Census 2011 should not have been the bone of contention. It is a wrong issue to fight over.

TOR talks about performance-based incentives for states. Does it sound like measuring states' performance by the Centre? Yes, this is another worrying part of TOR. The objective of FC is to provide the states sufficient resources to be able to meet people's requirements. If a state government is inefficient and you reduce the fund, you are imposing double burden on the people of that state. That is unfair. The states, which are falling behind the line, will need more resources. Giving more resources to a state that has done well and fewer resources to the states that are behind the target doesn't make any sense. Instead, you should be providing more resources to the states which are behind and if they perform well, they can be given bonus.

Another worry is about the Centre urging FC to finalise tax-devolution formula keeping in mind the national development programmes. Now, talking about performances of states in terms of Central schemes like New India-2022 is wrong. This way, you are using FC to push Centre's agenda. FC's principal reason for its existence is to further the activities of the states, not to push Centre's agenda. These are the reasons why states are upset.

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