Southern states demand reframing of ToR of 15th Finance Commission

Southern states demand reframing of ToR of 15th Finance Commission

In an unprecedented move, finance ministers of three southern states and one union territory came together on Tuesday, denounced the 15th Finance Commission's formula for sharing of revenue between the Centre and the states and made a decision to form a pressure group to oppose what they termed "anti-federal" policies of the Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) government.

Faced with drastic cuts in central transfers in the wake of the amended TORs, the finance ministers of three southern states - Kerala, Karnataka, and Andhra Pradesh, along with the union territory of Puducherry - came down heavily on the central government for punishing the "well performing" progressive states.

Finance ministers of Tamil Nadu and Telengana were conspicuous by their absence at the event.

Taking part in the conference, Tamil Nadu's neighbor Puducherry expressed grief. Through the meeting, the participants are trying to address concerns about the formula adopted in distribution of central funds and mobilise a national debate on the matter. Representatives will speak during the inaugural session and, later, present their position on six themes identified as central to the conference.

The finance ministers told the media after the meeting that changes in the terms of reference (ToR) of the finance commission would adversely affect the southern states and said they will form a bloc to carry forward their fight.

Kerala will host the crucial southern states' conclave today on the controversial new yardstick of the 15th Finance commission, under which they expect a huge drop in their share of tax revenue from the Centre.

However, a report in The News Minute said that Tamil Nadu Deputy Chief Minister O Panneerselvam, who also hold the finance portfolio, will skip the meeting. The Gulati Institute of Finance and Taxation here will function as the secretariat of the Group of Ministers and prepare the draft memorandum. "And they will be the beneficiaries of the new ToR, rather than us", Thomas Issac said. He added that the ToR of the 15th commission includes a provision for rewarding with special incentives states that have done well in terms of population control. He said the commission's task was not to gauge the performance of the States, but to share the taxes. Representing Karnataka, agriculture minister Krishna Byre Gowda said his state fully supports the views of other states.

Tamil Nadu will be the worst hit state - with a loss of over Rs 40,000 crore, while Kerala expects to lose around 16,000-20,000 crores, the minister said.

"Bringing down the rate of growth of population does not mean less expenditure for states". It is important for Tamil Nadu to work alongside southern states in this effort as we stand to lose the most.

"Also it's not right for the FC to determine populist schemes, as it's the right of the state government; it's a political decision that has to be taken while determining populist schemes", added Issac. "It should be doused before the southern flames scorch the federation".

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