Rajya Sabha Chairman M Venkaiah Naidu on Wednesday claimed the government has come up with a plan to incentivise performing states so that they are not penalised by the terms of reference of the 15th Finance Commission.
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 direct it to use the 2011 Census as the base year, and not the 1971 Census as has been the norm,
to determine the devolution of taxes.
The southern states, as well as West Bengal, Punjab and Delhi, have opposed this. 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.
“As the Chairman of the Rajya Sabha/council of states, when I saw this news item, I had called the Chairman of the Finance Commission and also members to my chambers and we had discussed it. They assured me that performing states will not be penalised at all under it,” PTI quoted Naidu as saying.
The panel will adopt “a formula of incentive and disincentive, and that’s the broad approach which they have told me”, he added.
The chairperson was responding to a question posed by All India Anna Dravida Munnetra Kazhagam MP V Maitreyan, who made a special mention of the matter in the Rajya Sabha. Maitreyan asked the government to direct the Finance Commission to go back to using the 1971 census.
Earlier this week, the commission’s chief NK Singh had said that states that have managed their population well may be incentivised as the terms of reference allow for that. “The states have correctly placed their demands to the president saying that they will lose if 2011 is taken as the year for taking population data,” Singh said on July 16.
The terms of reference “allow for incentivising states for doing better population control,” he added. “There will be no bias or prejudice governing us rather than what the Constitution does.”