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May 19, 2018

FMs submit memorandum to President demanding amendments to ToR of 15th Finance Commission

FMs submit memorandum to President demanding amendments to ToR of 15th Finance Commission

State Finance Minister Dr Amit Mitra, along with the finance ministers of Delhi, Kerala, Andhra Pradesh, Punjab and Puducherry met President Kovind on Thursday and submitted a memorandum, urging amendments to the Terms of Reference (ToR) of the 15th Finance Commission.

According to the memorandum, ‘The terms of reference violate the federal principle as enshrined in the Constitution, erode the autonomy of all States and bring significant financial hardship to all States.’

There are 13 amendments recommended by the ministers in the memorandum. The ministers said they had requested the President to amend the ToR by taking precedents from the past. According to them, many aspects of the ToR destabilise the well-settled federal arrangement.

Among the recommendations is reversing of the decision to use the 2011 population census instead of 1971 as a basis for the devolution of taxes from the Central Government to the States as that would destroy the latter’s financial autonomy. This is because the change of census year mentioned would result in the States which have been successful in controlling their population growths, which is very important from the country’s perspective as a whole, getting much lesser shares of the Centre’s collected tax through the devolution process.

The memorandum says that the Terms of Reference seek to control ‘populist measures’, demanding its deletion as it is for the popularly elected Governments to decide what is ‘populist’ and what is not.

The other amendments sought include deletion of the reference to Direct Benefit Transfers (DBT). The 15th Finance Commission has said that the States will be assessed on the progress made by them in promoting DBT. The Central Government has been flaunting the increase in DBT as a key achievement.

The finance ministers, as per the memorandum, also want the reference to ‘flagship schemes of the Government of India’ to be deleted. The ToR says that ‘achievements in implementation of flagship schemes of the Government of India’ will be criteria to determine a State’s share from Central funds. The ministers have argued that this is blatantly against the federal values in the Constitution.

These finance ministers had met in Amaravati in Andhra Pradesh on May 8 to work on the memorandum.

Source: The Hindu