FM Arun Jaitley Clears The Air Around Fifteenth Finance Commission, Calls Controversy Needless

In a Facebook post, Finance Minister Arun Jaitley today (10 April) tried to dispel the controversy surrounding the Terms of Reference (ToRs) of the Fifteenth Finance Commission and termed the allegations that the ToR was biased against a particular region of the country as baseless.

The ToR determine the individual states’ share of the central taxes and some southern states have expressed concerns that their share of central funds might be cut drastically based on the new ToR.

The clarification comes after the finance ministers of Kerala, Andhra Pradesh, Karnataka and Puducherry today came together to demand that the ToR be reframed. Tamil Nadu and Telangana however opted out of the conference.

The participating ministers alleged that the states are being punished for being progressive and being better in terms of population control. “The best performing states are punished and worst performing ones are rewarded,” said V Narayanasamy, Puducherry Chief Minister.

According to Jaitley, the states are allocated their shares of Central revenue based on the amount needed to make up for the ‘deficiency in providing a minimum standard of services to their people’ and that the states need not be concerned. For the new ToR the commission will be using 2011 census data, same as the Fourteenth Finance Commission. The Fourteenth Commission had notably allocated 42 per cent of central taxes to the states, the highest ever.

Jaitley tried to allay the fears of the states by saying that the ToR encompassed ‘efforts and progress made in moving towards replacement rate of population growth’ and assigns appropriate weight to the progress made in population control.

He also said that the Fifteenth Commission’s ToR makes sure that the states’ needs are met and that the allegations of the ToR being biased or having a mandate is baseless.