New terms of fund devolution skewed in Centre's favour: Odisha CM

Odisha has taken exception to the new Terms of Reference (ToR) of the 15th Finance Commission. Chief minister Naveen Patnaik has said the new ToRs are a departure from the terms of the previous Finance Commissions and will shrink the flow of funds to states.

Patnaik, in a letter to Prime Minister Narendra Modi, said the new terms might have an adverse impact on horizontal devolution for Odisha as well as vertical devolution for states. More, the suggestions by the Odisha government during consultations before notifying ToRs seem to have been ignored, he added.

On vertical devolution, the ToRs seek to put fetters on the remit of the Commission. Instead of giving freedom to the panel on resource sharing between the Centre and the states based on the respective needs, there are suggestions in the ToRs indicating the overriding priorities and concerns of the Union government. 

The ToRs make a radical departure on horizontal devolution by mandating the Commission to use the population data of 2011 while making its recommendations. Patnaik felt population criteria is an important factor in determination of share of a state in the divisible pool. The use of 2011 Census data is contrary to National Population Policy statements and the assurances to states which have actively implemented population stabilization measures. Odisha is already below the Population Replacement Rate of 2.1 indicating that the state has stabilized her population. Patnaik has demanded that the population data of 1971 be referenced by the 15th Finance Commission while making recommendations.

He went on to say that the ToRs lack incentives for states which have achieved the replacement rate of population growth. Patnaik feared that such states will lose out on resources unless the ToRs are suitably amended as the Commission will use the population data of 2011 Census. 

Patnaik again flagged the demand of special category status for Odisha, citing that the issue needs urgent consideration. To buttress his demand, the chief minister pointed to the lack of adequate physical and social infrastructure in a large number of districts which need huge resources to plug the gap. Central schemes such as Special Plan for KBK (Kalahandi-Bolangir-Koraput), Integrated Action Plan (IAP) for LWE (Left Wing Extremism) affected districts and Backward Regions Grant Fund (BRGF) have been discontinued. That apart, Odisha's repeated appeals to allow the state for availing sharing pattern in the centrally sponsored schemes at par with North-Eastern and Himalayan states have not been accepted.