The finance ministers of four states and two union territories met President Ram Nath Kovind on Thursday seeking amendments to the 15th Finance Commission’s terms of reference.
Delhi Finance Minister Manish Sisodia, Andhra Pradesh’s Yanamala Ramakrishnudu, Kerala’s Thomas Isaac, West Bengal’s Amit Mitra, Punjab’s Manpreet Singh Badal, and Puducherry Chief Minister V Narayanasamy – who also holds the finance portfolio – submitted a statement to Kovind. They urged the president to change the panel’s mandate as the terms of reference “violate the federal principle as enshrined in the Constitution, erode autonomy of states, and bring significant financial hardship to all states”, PTI reported.
The Finance Commission decides how the taxes collected by the Centre should be distributed among the states. The government’s terms of reference for the 15th Finance Commission ask it to use the 2011 Census, and not the 1971 Census as has been the norm, as the base year to determine the devolution of taxes.
A state’s population is a significant factor in determining how revenue is distributed, and the southern states, which have controlled their population growth over the decades, fear that the new base year will harm their interests.
“The terms of reference of the 15th Finance Commission raise serious concerns,” the finance ministers’ statement said, listing “infringement of constitutional provisions”, “disruptive federal fiscal arrangements”, and “technical errors” as grey areas.
“If the existing terms of references of the 15th Finance Commission are implemented, the states will stand to lose their financial autonomy,” Sisodia, who is also Delhi’s deputy chief minister, said.
This meeting with the president came just over a week after the 15th Finance Commission formed an advisory panel to assist it on this matter. The panel will also help the commission, headed by former bureaucrat NK Singh, understand the best national and international practices on devolution of taxes.