New ToR of Finance panel to hit fund allocation, says Naveen

Odisha govt fears if latest census figures taken into consideration, the state may not get adequate resources in the 14th Finance Commission

The recent changes made to the Terms of Reference (ToR) of 14th Finance Commission regarding fund allocation based on latest population figures will affect states like Odisha, which has shown moderate population growth in recent years, said Chief Minister Naveen Patnaik.

The new TOR for the 14th Finance Commission, published in form of Presidential Order on January 1, 2013, says that the Commission, while fixing the amount of fund allocation for states, shall take the base of population figures as of 1971. The Commission may also take into account the demographic changes that have taken place subsequent to 1971, it added.

The state government fears, if latest census figures are taken into consideration, it may not get adequate resources.

“Compared to other 17 states, 11 states such as Andhra Pradesh, Assam, Chhattishgarh, Goa, Himachal Pradesh, Karnataka, Kerala, Odisha, Punjab, Tamil Nadu and West Bengal, whose population registered a moderate growth since 1971, will suffer significant loss in devolution (fund allocation), if the 2011 population is adopted (as a basis) by the 14th Finance Commission,” Patnaik said in a letter to the Union Finance Minister, P Chidambaram.

The Finance Commission is a statutory body that has to be set up under the Constitution every five years. Its primary responsibility is to finalise division of taxes and other monetary resources between the Centre and the states along with some other issues relating to public finances. The funds are allocated based on the population strength of the states.

Patnaik pleaded that the Commission should not adopt latest figures for calculation of fund allocation as many previous commissions and other government agencies had considered 1971 figures as base figures.

The adoption of new figures will affect resource distribution among 11 states, which have made effort to arrest population growth, he added.

“If the 14th Finance Commission choose to go by the ToR and take into consideration the demographic changes that have taken place after 1971, then it is going to adversely affect the level of resource transfer to the states which took progressive steps to arrest the rapid growth of their population,” the chief minister said and requested the Union finance minister to take steps to restore the population criterion of the previous Commission in the terms of reference of the 14th Finance Commission.