Stating that the Terms of Reference (ToR) of the 15th Finance Commission undermine the federal structure, a meeting of finance ministers in Andhra Pradesh’s capital of Amaravati on Monday decided to seek President Ram Nath Kovind's intervention to reframe them.
The day-long meet concluded with the decision that they will call on the President to urge him to ask the Central government to amend the ToR to prevent a federal imbalance in the country.
The meet, convened by the Andhra Pradesh government, discussed the contentious ToR and the draft memorandum to be submitted to the President. Finance ministers from 11 states attended the meeting.
Addressing the meeting, Andhra Pradesh Chief Minister N. Chandrababu Naidu said the ToR will weaken the very cause of cooperative federalism. He called upon all states to unite and prevent the significant hardships they will face with these ToR.
Naidu remarked that ToR almost penalises states for being progressive and well-performing.
"States that are good at population control will be in debt. South Indian states, in particular, who have been reportedly good at population control, will be affected.
"The few seats that South Indian MPs have in the Parliament will soon not be ours. The little voice we have will soon go away," he was quoted as saying by a statement from the Chief Minister's Office.
"Poorly performing states must be uplifted, but not at the cost of progressive states. A new paradigm for devolution must be established in the spirit of partnership between the Centre and states, and not based on dominance of the former over the latter," he added.
Quoting the Fiscal Responsibility and Budget Management Act, he said the Central government was borrowing a lot of money but not allowing states to do so.
"The 15th FC has been asked to determine whether the states are controlling the expenditure on populist measures. The obvious question that arises is why should the Centre too not be assessed through the same lens?," said Naidu, whose Telugu Desam Party (TDP) pulled out of the BJP-led Central government and the National Democratic Alliance (NDA) over the demand for special category to the state.
Andhra Pradesh's Finance Minister Y. Ramakrishnudu said the use of population from Census 2011 by 15th FC with a greater weight for determining the allocation of funds to the states would cause great injustice to the states.
"This approach would penalise states which have shown declining fertility rates and lower population growth over the past four decades," he said.
Puducherry Chief Minister V. Narayanaswamy demanded that the ToR should contain a paragraph to include provisions for union territories also.
"The present ToR indicate a move towards central discretion in the release of funds to states. What the states want is the opposite. We want a financial regime in which there is a decisive move away from discretionary to assured devolutions," he said.
Delhi Deputy Chief Minister Manish Sisodia said the 15th Finance Commission will only lead to a centralised path to development. He expressed his support and to the cause of the conclave.
Amit Mitra, West Bengal Finance Minister, said resistance to this Finance Commission is vital as the ToR are in violation of fundamental constitutional values.
"States are facing massive revenue deficits. We are forced to borrow from the market to keep our basic government initiatives running. We need to resist this forced ceiling placed on states' ability to borrow."
Punjab Finance Minister Manpreet Singh Badal, spoke about the impact of GST-related changes.
"We need to take care of power subsidies, food security and facilities that we assure our people. The ToR act as an impediment and are violative of at least Articles 270 and 285."