South Indian Finance Ministers meet highlights: Kerala Chief Minister Pinarayi Vijayan will inaugurate the conference today (File Photo)
Finance ministers of four southern states will meet Tuesday to discuss their concerns over the Terms of Reference of the 15th Finance Commission. Hosted by Kerala, the meeting has been convened with the objective to highlight the issue and “make it a national agenda for debate”. Officials from Karnataka, Andhra Pradesh and Puducherry will attend the meeting, which will be inaugurated by Kerala Chief Minister Pinarayi Vijayan. Officials from Telangana will skip the meeting, and it is unlikely that Tamil Nadu will attend.
Kerala Finance Minister T M Thomas Isaac said the new formula, which will adversely affect southern states, has not become a debate in the country. “We will not allow to destroy the federal co-operative structure of the nation,” he was quoted as saying by news agency PTI.
Also read | Amid concerns from South, a case for modifying terms for distribution of taxes
South Indian states have raised concerns over a new population-based formula for tax sharing between the Centre and states. The 15th Finance Commission, constituted in November 2017, has recognised population as an important criteria for distribution of taxes and said it will use data from the 2011 census while making recommendations for the five-year period beginning from 2020.
The southern states, however, want the recommendations to be based on 1971 census data. This is because, as compared to northern states, south India has recorded significant progress in population control or in the replacement rate of population growth.
Senior Congress leader and former finance minister P Chidambaram on Twitter said that the terms of reference of the 15th Finance Commission were 'seriously flawed' and would adversely affect the better-performing states.
Andhra Pradesh Finance Minister Y Ramakrishnudu says the Centre has "arbitrarily" decided ToR without consulting the states. Calling this against the law of the land, he adds, "We've to see that more power is given to states. 80 per cent of development will be done by states and only 20 per cent by the Centre," reports ANI.
Representatives of Kerala, Karnataka, Andhra Pradesh and Puducherry, along with Kerala Chief Minister Pinarayi Vijayan (first from left). The meeting is being held in Thiruvananthapuram, Kerala.
Kerala Finance Ministers, addressing the press, calls the new method of tax calculation an "unacceptable level of loss". He adds that while the population of southern states has increased by 56 per cent, that of north Indian states has increased more than 150%. The meeting between Finance Ministers of states is underway in Thiruvananthapuram. Representatives of Tamil Nadu and Telangana have skipped the meet.
This isn't the first time states are protesting against the ToR of the Finance Commissions. In 2013, Odisha Chief Minister Naveen Patnaik raised similar concerns, saying the ToR would impact resource transfer to 11 states, which had taken progressive steps to arrest the rapid growth of population. The 11 states were Karnataka, Kerala, Tamil Nadu, Andhra Pradesh, Assam, Chhattisgarh, Goa, Himachal Pradesh, Odisha, Punjab and West Bengal.
Tamil Nadu's main Opposition party, the DMK, has raised concerns over the 15th Finance Commission's proposal. Party working president M K Stalin last month wrote to Prime Minister Narendra Modi voicing his concerns over the issue. The ruling AIADMK party in Tamil Nadu decided against attending the meet yesterday.
Speaking to The Indian Express on Monday, Kerala Finance Minister Thomas Isaac said, "Participation of Tamil Nadu is still hanging in the air. O Panneerselvam (Finance Minister of Tamil Nadu) spoke to me and said that he is unable to attend the meeting. And it is also confirmed that Telangana is not attending."
It is unlikely that Tamil Nadu will attend the meeting today. Sources close to Tamil Nadu Finance Minister O Panneerselvam told The Indian Express, "All other southern states attending the meeting are opposing the Centre. He does not want to share a stage with them."
Telangana has pulled out of today's meeting.
On the issue, Karnataka Chief Minister Siddaramaiah has noted that even though the six states south of the Vindhyas “have nearly reached replacement levels of population growth” population remains a “prominent criteria for devolution of central taxes”. He asked: “For how long can we keep incentivizing population growth?”
In an opinion column in The Indian Express on Sunday, former finance minister P Chidambaram explains why using data from the 2011 census will have serious implications for Centre-states relations. "Southern states have lost 6.338% on account of better governance and better outcomes, but they were at least protected against the consequences of a fall in their share of India’s population," he writes.
"According to the 1971 Census, their population was 24.7% of the total population; according to the 2011 Census data it had fallen to 20.7%. If all other factors are kept constant, the mandate to the 15th Finance Commission to consider the population according to the 2011 Census will further reduce the shares of the Southern states," he adds. Read his column titled Across the aisle: Southern flames may scald the nation.
Today's meeting has been initiated by Kerala's finance minister Thomas Isaac. He claims Kerala stands to lose Rs 20,000 crore if the Finance Commission bases its recommendations on the 2011 Census data, and Tamil Nadu, twice this amount.
Since the early 1950s, Finance Commissions have been tasked with working out the distribution of taxes between the Centre and states. This is done based on several factors, including fiscal capacity and discipline, area, fiscal distance from top-ranking states and most importantly, population.
The 15th Finance Commission, constituted in November 2015, has proposed making recommendations based on population data from the 2011 census — till the 14th Finance Commission, recommendations were made according to 1971 data. Southern states are unhappy about this as they believe it will not reflect their efforts to check population. Also read | Here's why southern states are unhappy with the proposed ToR
Finance Ministers from Kerala, Karnataka, Tamil Nadu, Andhra Pradesh and Puducherry will attend a conference in Thiruvananthapuram today to share their views and concerns on the terms of reference of the 15th Finance Commission. Follow our LIVE blog for the latest news.