15th Finance Commission: South solidarity opens anti-BJP front

(Left to right) Puducherry Chief Minister V.Narayanasamy, Kerala Chief Minister Pinarayi Vijayan, A.P. Finance Minister Yanamala Ramakrisnudu, Kerala Finance Minister T.M. Thomas Issac and Karnataka Agriculture Minister Krishna Byre Gowda at the Conclave of Finance Ministers of Southern States held in Thiruvananthapuram on April 10, 2018.

The Finance Ministers of three South Indian States and the Chief Minister of Puducherry resolved here on Tuesday to enlist the support of all States not ruled by the BJP and appeal to the President Ram Nath Kovind to rework the terms of reference of the 15th Finance Commission.

Briefing presspersons about the deliberations of the conclave that discussed the impact of the present terms of reference, Kerala Finance Minister T.M. Thomas Isaac said the participants had decided to involve the governments of West Bengal, Punjab, Odisha and Delhi to submit a memorandum to the President and explore legal options. They would try to elicit the support of Tamil Nadu and Telangana governments, which did not send their representatives to the meeting.

Conditional welcome

The BJP Chief Ministers too can join the movement, but will have to abide by the memorandum, Dr. Isaac said.

A similar conclave will be held in Visakhapatnam in April-end or early May to finalise the memorandum to the President. The Gulati Institute of Finance and Taxation here will function as the secretariat of the Group of Ministers and prepare the draft memorandum.

The Ministers said the Centre arbitrarily prepared the terms of reference, alleging a conscious effort to cut the Central share of taxes to the States. The terms would affect the vertical devolution of taxes to the States.

Dr. Isaac said the Centre was attempting to cut the States’ share to fund its own schemes. That meant that the State governments would be compelled to relinquish its own welfare schemes and look forward to incentives for implementing the Centrally sponsored Schemes.

Curbs on deficit

The commission had been told to consider whether the revenue deficit grant should continue at all. Stringent norms may be laid for borrowing and the States may be told to bring down the fiscal deficit to 1.7%, which would have a direct impact on the development initiatives of the States.

He said the commission’s task was not to gauge the performance of the States, but to share the taxes. The movement would emerge as one that would discuss the nature of the Centre-State relations, he said.