Finance Commission to ensure no states at disadvantage

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 there is still time for the finalisation of 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 then finalise the guidelines. It is commission's responsibility to ensure no states is at disadvantage," a senior official told DH.

Southern states of Tamil Nadu, Kerala, Karnataka and Andhra Pradesh fear that they stand to lose if the commission uses 2011 Census and not the 1971 Census to base its formula for sharing Central tax revenues. They claim they 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 large population.

These states have alleged that the commission's award based on Census 2011 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 Centre's recommendation to the latest Finance Commission to use 2011 Census as the base. Now, the BJP fears it may snowball into a major issue ahead of Karnataka Assembly polls in May and dim its prospects if the southern states together chalk out a strategy to take on the Central leadership.

The BJP  is already facing criticism for not fulfilling special status demand made by political parties in Andhra Pradesh. The ruling TDP has walked out of the NDA alliance at the Centre and preparing along with other Opposition parties to bring a no-confidence motion against the government in Lok Sabha.

Karnataka Chief Minister Siddaramaiaya has asked chief ministers of southern states to unit against the move which he said was "against the interest" of southern states.

Concerned about the raising angst of southern states, BJP General Secretary Ram Madhav earlier this week met N K Singh, the Chairman of the 15th Finance Commission, who assured him that the commission would instead incentivise the southern states rather than punishing them.

The Finance Commissions guidelines will be finalised only by next year before which it is expected to take an extensive tour of states and take note to their grievances. The commission's recommendations will come into effect from April 1, 2020.