Delhi gets little from central funds: Will 15th Finance Commission be fair?

The meeting with the president was a culmination of weeks of deliberations between the finance ministers of non-Bharatiya Janata Party states since April

On May 17, finance ministers of five non-BJP states met President Ram Nath Kovind to discuss the terms of reference for the Fifteenth Finance Commission (FC-XV). They submitted a memorandum suggesting several amendments to the terms provided to the commission by the president earlier this year.

The finance commission is a constitutional body set up by the president every five years to determine the share of each state in central taxes. A large portion of this pool of funds is set aside for the use of the Central government, and the rest is distributed to the states.

The meeting with the president was a culmination of weeks of deliberations between the finance ministers of non-Bharatiya Janata Party (BJP) states since April. Initially, the debate was dominated by the fact that the use of the 2011 Census instead of the 1971 Census puts southern states at a serious disadvantage. But many other concerns have come up through these deliberations. The last point on the list of suggested amendments submitted to the president was specifically about Puducherry and Delhi, both of which are Union territories (UTs) with legislature.

It was suggested that a “suitable amendment be made in the TOR (terms of reference) to ensure that the award of Fifteenth Finance Commission must apply to UTs with legislature also.”

In the past, the terms have specified that the commission should consider the demands on resources of the Centre as well as states in the process of carrying out their respective functions. Union territories have not found any mention in these documents, because they were possibly considered an implied burden on the Centre. However, Delhi and Puducherry, both of which are UTs with legislature, have never been considered by any Finance Commission while determining the share in central taxes. In October last year, the Centre decided to treat Puducherry “at par with states” for the purpose of devolution of funds, but not Delhi.

Delhi chief minister Arvind Kejriwal and his deputy and finance minister Manish Sisodia point out that Delhi pays as much as Rs 1.08 trillion or 13% of India’s entire direct tax collection. Credit: PTI Files