Finance Commission to consult states before finalising guidelines

As the peeved Southern states meet on April 10 for a unified action against the Finance Commission's likely move to use 2011 Census as the base for evolving its resource-sharing formula, the government has maintained that there is still time for finalisation of the commission's recommendations.

The 15th Finance Commission too has said that each state will be consulted before final guidelines are put out.

"Recommendations of the 15th Finance Commission will be implemented from April 1, 2020. The final guidelines will come out only next year. The commission has ample time to listen to all states and finalise the guidelines. It is the commission's responsibility to ensure that no state is at a disadvantage," a senior official told DH.

The Southern states of Tamil Nadu, Kerala, Karnataka, and Andhra Pradesh, fear that they stand to lose if the commission uses the 2011 census, and not the 1971 census to base its formula for sharing Central tax revenues. They claim to have since upgraded their social indicators, and worked to control population. Population is one of the major criteria for sharing the Central tax kitty, as more funds go to states with a large population.

These states have alleged that the commission's award based on the 2011 census would amount to penalising them for faring well on social indicators and rewarding the BIMARU (Bihar, Madhya Pradesh, Rajasthan and Uttar Pradesh), who have done little to control population.

The BJP-led government at the Centre appears to have been caught in its own web, since it was the Centre's recommendation to the latest Finance Commission to use the 2011 Census as the base. Now, the BJP fears that it may snowball into a major issue ahead of the Karnataka Assembly polls in May, and dim its prospects if the Southern states together chalk out a strategy to take on the Central leadership.