Kerala Finance Minister Thomas Isaac told TNM that the Prime Minister’s suggestion to the 15TH Finance Commission is not enough.

Centre should be open for dialogue Kerala FM reacts to PM Modi on Finance Com
news Finance Thursday, April 12, 2018 - 16:18

Hours after Prime Minister Narendra Modi announced that the Centre had suggested to the Finance Commission to incentivise states that had controlled its population, Kerala Finance Minister Thomas Isaac said that his suggestion was not enough.

In an interview to TNM, the Kerala Finance Minister said, “We all appreciate that the Prime Minister has chosen to respond to our concerns. But it is not sufficient that states which have controlled population are incentivized. Because the major proportion of the tax devolution, say more than 80% is on the basis of general formula and this incentive would constitute a maximum of 10 to 15% of the overall devolution. Therefore, the loss that the states which were able to control population suffered can’t be offset through an incentive system.”

Population is just one of the measures that the Finance Commission – a body that determines how tax revenue collected by the Centre is distributed among the states. Several southern states had voiced their opposition to the Terms of Reference in the 15th Finance Commission, which had recommended using the 2011 Census against the 1971 Census, which had been used by earlier commissions.  Leaders like Thomas Isaac argued that this change would impact the amount of funds southern states received as the had worked hard to control their population over the past 30 years.

Pointing out that the 14th Finance Commission had chosen to give the 1971 Census more weightage – 17.5% - while the 2011 Census was given weightage of 10%, the Kerala FM suggests that the Centre give the 15th Finance Commission the same freedom to decide its methodology.   

“The more appropriate course of action would be to allow the 15th Finance Commission to give the freedom to choose a similar methodology that was adopted by the 14th Finance Commission. The 14th Finance Commission chose 17.5% for 1971 Census and 10% for 2011 Census,” suggested Isaac.

Urging the Prime Minister to convene the National Development Council to discuss the ToRs, the Kerala FM also said, “The Centre should be open for a dialogue. The states which attended the Thiruvananthapuram conclave of southern state Finance Ministers are going to attend another one in Visakhapatnam and would appreciate to have an open dialogue with the Centre.”

Kerala had hosted a conclave of south Finance Ministers in Thiruvananthapuram on Tuesday to deliberate on the ToRs in the 15th Finance Commission and to suggest modifications. While Andhra Pradesh, Karnataka and Puducherry participated, Tamil Nadu and Telangana chose to skip the meeting. Following the day-long meet, Isaac announced that their next step would be to bring onboard more states at another meeting scheduled to be held in a fortnight at Visakhapatnam. Their aim is come up with a joint memorandum that they will then present to the President to seek modifications to the ToRs.

Meanwhile, sources in the Telangana Finance Minister’s office told TNM that the state is looking for concrete developments on the matter from the Centre.  

Facing mounting criticism over the Finance Commission, Prime Minister Narendra Modi broke his silence on Thursday. Speaking in Chennai inaugurating a building of the Adyar Cancer Institute, Modi said, "Let me tell you our critics seem to have missed something. The Union government has suggested to the Finance Commission to consider incentivising states who have worked on population control. By this yardstick, states like Tamil Nadu, which has devoted a lot of efforts, energy and resources towards population control, would certainly benefit.”

The PMO Twitter handle had also tweeted to say, “A baseless allegation is being made about the Terms of Reference of the 15th Finance Commission, being biased against certain states or a particular region: PM”

(With inputs from Charan Teja)

Also read: PM's damage control: Asks Finance Comm to incentivise states that controlled population

 

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