FM Arun Jaitley says controversy over 15th Finance Commission ToRs 'needless'

 BusinessToday.In   New Delhi     Last Updated: April 10, 2018  | 22:11 IST
FM Arun Jaitley says controversy over 15th Finance Commission ToRs 'needless'

A few hours after three non-BJP ruled states and a Union Territory expressed opposition to the Terms of Reference (ToR) specified by the central government in the 15th Finance Commission, Finance Minister Arun Jaitley called it "needless controversy", which is "further from truth".

During a conclave of the finance ministers of southern states in Thiruvanantapuram, the ministers of Kerala, Karnataka, Andhra Pradesh and Puducherry said these ToRs were in contradiction to the principles of federalism enshrined in the Constitution and also would result in revenue loss to performing states, reported PTI.

"The share in Central taxes is allocated to the States based on recommendations made by the Finance Commissions (FCs) to help states to meet fiscal deficiency in providing a minimum standard of services to their people. This calls for assessing states' 'needs' on rationale and equitable basis. FCs use appropriate criteria to assess true needs of states. Population proxies very well for the needs of the people in quantitative sense. Another criterion, the income distance, which captures very well relative poverty of people in the states, is used to assess qualitative needs," said the finance minister.

He added that these two parameters allocate more resources to the populous and poorer states, which need additional funds for providing education, health and other services to the people, which own resources of these poorer states may otherwise not allow.

The states that are not happy over the ToRs have said they strongly oppose the use of the 2011 census to calculate population for allocation of union tax revenue instead of the 1971 census data used by previous finance commissions.

"The 14th FC had no specific mandate for using 2011 census. Yet, the 14th FC rightly used the 2011 census population data to capture the demographic changes since 1971 to make realistic assessment of the needs of the states. It allocated 10 per cent weight to 2011 population. The 14th FC had allocated a 42 per cent share in the central taxes to the states more than ever before," said Jaitley.


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