15th Finance Commission treating J&K like any other UT: N K Singh

The Fifteenth Finance Commission has treated Jammu & Kashmir like any other Union Territory, and at least for 2020-21, it will get funds out of the Centre’s share of the divisible tax pool, the Commission’s Chairman NK Singh (pictured) said on Monday.

This is a different stance from what the Jammu and Kashmir Reorganization Act had sought from the Commission. The Centre, through the Act, had wanted the Union Territory to be given a special provision and provided with funds out of the divisible pool like any other state, while Ladakh was to be treated like any other UT and given funds out of the Centre’s share of the divisible pool.

“We have treated it (J&K) as a Union Territory. How can you treat a UT to be anything other than a UT?” Singh said during a media interaction. The interaction came after members of the Commission met representatives of its economic advisory council.

“We did a modelling for 28 states and not 29 states. India is now a union of 28 states, and has two new Union Territories. Constitutionally, there would be an infirmity on non-states getting devolution,” Singh said.

The J&K Reorganization Act states: “The President shall make a reference to the Fifteenth Finance Commission to include the Union territory of Jammu and Kashmir in its Terms of Reference and make award for the successor Union territory of Jammu and Kashmir.” Finance Commissions don’t consider Union Territories for devolution of funds, only states. This paragraph in the Act means that the 15th Commission was to consider J&K like any other state. 

“We have received no such reference. So we have gone by what we go by. That does not mean that we have not factored that J&K’s share will come out of Centre,” he said. 

By treating J&K like any other UT, the Commission seems to have staved off a political fight. Delhi and Puducherry are similar to J&K in that they have their own legislatures, elected governments, and even the police force and law and order are under the elected government’s control. 

A special provision for J&K would have led to similar demands from Delhi and Puducherry, which so far have been denied funds directly out of the divisible pool, and are given funds from the Centre’s share like any other Union Territory. 

According to a press release, after the meeting, the advisory council’s members were updated by the Commission regarding the additional terms of reference extending its term till October 2020. Additional ToRs also asked the Commission to submit two reports — one for 2020-21 and second report for the five-year period of 2021-22 to 2025-26. 

“Possible macro assumptions for the Commission’s award period relating to real growth, inflation etc were discussed in detail. Issues like the structural shift in inflation, the relationship between the GDP deflator and the consumer price inflation and possible trajectories of movement in real activity were discussed. Tax revenues and expenditure patterns emerging both at the Union and the States level and possible way to improve tax collection for additional resource mobilization were also discussed,” the release said.