Prime Minister Narendra Modi on Thursday rejected the accusation that the Centre was biased against the southern states, and said there were baseless allegations against the 15th Finance Commission’s terms of reference.

“Our critics seems to have missed that the Union government has suggested to the Finance Commission to consider incentivising states who have worked on population control,” he said. “By this yardstick, a state like Tamil Nadu, which has devoted a lot of effort, energy and resources towards population control would certainly benefit.”

The prime minister was speaking at an event at the Cancer Institute in Chennai’s Adyar area. He arrived in Chennai on Thursday morning to inaugurate the Defence Expo India 2018 amid demonstrations against the Centre’s delay in forming the Cauvery Management Board.

The Finance Commission decides how taxes collected by the Centre should be distributed among the states. The terms of reference for the 15th Finance Commission say that it should use the 2011 Census – and not the 1971 Census as has been the norm – as the base year to determine how the revenue is divided. Southern states, which have controlled their population growth over the decades, fear that the new base year will harm their interests.

On Tuesday, finance ministers and officials from Andhra Pradesh, Kerala and Karnataka and Puducherry met in Thiruvananthapuram to strongly oppose the terms of reference for the devolution of funds to states. Andhra Pradesh Finance Minister Y Ramakrishnudu had said the Centre arbitrarily decided the terms of reference for the new policy, without consulting state governments.

Tamil Nadu’s Opposition party Dravida Munnetra Kazhagam, Karnataka Chief Minister Siddaramaiah and Andhra Pradesh Chief Minister N Chandrababu Naidu have also spoken out against the new system.