Days after murmurs of discontent from south Indian leaders over the manner in which funds are allocated by the Centre, the Union government has finally reacted. Subhash Chandra Garg, Secretary of the Department of Economic Affairs, Ministry of Finance, made a statement on Monday, where he justified the use of the 2011 census figures in the 15th Finance Commission for the population component of the formula used for distributing central funds to the states.
Several regional leaders, especially from the south, have slammed the 15th Finance Commission Terms of Reference, which uses the 2011 census figure instead of 1971 to allocate funds to the state. They have said that this will penalise the states that have managed to control their population, and reward states that have performed badly.
Responding to these charges, Subhash Chandra Garg said, “I would not comment on the political side of it. I would just give you facts for information.”
“Number 1, the Terms of Reference of the 15th Finance Commission makes two specific references to the population kind of issue. One, it states very clearly that wherever any year is to be used for the purpose of population, it will be 2011. There is another specific reference in the Terms of Reference which says that while drawing an incentive program for incentivising the states, the Finance Commission will take into account the progress of the states towards replacement level of population. So that second reference is intended to encourage and incentivise the states which have done well on population control,” he said.
“And those are very specific things. So, those states which moved towards the replacement level of fertility should be incentivised. That’s the expectation as per the Terms of Reference. So, it is very balanced. It’s not one-way or the other,” he said.
Justifying the use of 2011 census figures, Subhash Chandra suggested that despite the fact that the 15th Finance Commission was asked to use the 2011 numbers specifically by the Centre, it would not have made a difference even if they were not.
“The last Finance Commission did not have any specific reference to use 2011 as the year for determining the share whenever the population was to be used. But, the last Finance Commission, on its own, decided to use both 1971 and 2011. For 1971, they allocated 17.5% weight and for 2011, they allocated 10% weight,” he said.
Claiming that there is merit in using the more recent population numbers, he said, “The population, in a way proxies the requirements, fiscal needs, and therefore the Finance Commission decided last time to use 10% without any specific reference. So, it’s not something which is new. It is there in the current Finance Commission’s Terms of Reference, but both of them have been presented in a balanced manner.”
The statement comes on the back of several regional leaders, especially from the south, taking issue with the Terms of Reference of the 15th Finance Commission.
DMK working president Stalin had called the Terms of Reference a travesty of justice. In fact, the DMK leader had also slammed Clause 4 (ii) – incentives for “Efforts and Progress made in moving towards replacement rate of population growth” – which the Centre has now claimed will be beneficial to states that have performed well to control their population.
Stalin wrote a letter to 10 Chief Ministers, saying, “These two Terms of Reference will negatively impact the allocations to many progressive states like ours in a compound way. On the one hand, we will be losing disproportionally by the use of 2011 census data as the basis, and on the other, we will also be deprived of any incentive under Term #4, as we achieved (or exceeded) the neutral net reproductive rate target long ago. Taken together, these must be construed as the most counter-productive measures taken hitherto with regard to population control incentives provided by the central government.”
Following this, Karnataka Chief Minister Siddaramaiah also slammed the 15th Finance Commission ToRs. Taking to Twitter, Siddaramaiah hit out at the Centre for changing the base year to the 2011 Census and called for resistance among the southern states.
“Center asks 15th FC to use 2011 census data instead of 1971 census used so far to determine devolution of taxes. This will further affect the interests of the south: we need to resist,” Siddaramaiah said.
Andhra Chief Minister Chandrababu Naidu and Jana Sena leader Pawan Kalyan, too, have spoken out against the Terms of Reference. “There is nothing called Central money or state’s money. It’s the people’s money. The southern states contribute maximum tax revenues to the Centre, but the latter is diverting the money to the development of northern states,” Naidu said during the Governor’s address in the state legislative council in Amaravati.
Sharing an article on the issue, Pawan Kalyan had questioned the population-based formula for sharing tax revenues between states, and asked if the Centre was going to use the 'success of south Indian states' against their own interests.