'North-south divide' debate unfounded, no injustice to any state: Finance Commission

Amid reports of existence of a 'north-south divide' in it, the Finance Commission today ruled out injustice to any state in the allocation of divisible pool of central revenues and asserted that such a debate is unfounded, sources said.

Vice President M Venkaiah Naidu today met members of the Commission and sought an explanation into the matter, sources in the Rajya Sabha Secretariat said.

"During the meeting, the Commission ruled out any injustice to any state in the allocation of divisible pool of central revenues and asserted that the north-south debate being sought to be raised in the matter is unfounded," a source said.

The finance ministers of six opposition-ruled states and union territories met President Ram Nath Kovind yesterday and sought amendments in the "unfair" terms of reference of the 15th Finance Commission.

"The Commission's stand in this regard was stated at the meeting of its chairman and members with the Vice President here today. Terms of reference of the commission, their implications and broad approach likely to be followed by the commission were discussed at length during the hour-long meeting," said the source.

Naidu, the sources said, told the commission members that as chairman of the Council of States he thought it would be appropriate to talk to them about the principles followed by various commissions in the recent past and their thinking in the current context.

He brought to their notice reports about reservations of some states on some aspects of the terms of reference of the commission and some even suggesting a North-South perspective.

Chairman of the Commission N K Singh and the members informed Naidu that rewarding states for their past performance besides incentivising future performance, specific needs of the states and the Centre, right of citizens for equal entitlements broadly guide the Commission's approach to determining the allocation of revenues between the Centre and states and among the states.

Elaborating further, Singh said the 14th Finance Commission was asked to go by the 1971 Population Census but it took into consideration the 2011 Census, there by rewarding those who did well in population control, the sources said.

He said the terms of reference suggested a broad set of nine indicators including "efforts and progress made in moving towards replacement rate of population growth" to reward well performing states.

Naidu suggested to the commission to further the cause of economic unity and integration of the nation, performance, reforms, specific needs of the states and the Centre and the problems of farm sector within the ambit of the terms of reference of the Commission.

"The VP in the meeting stressed that the commission should do needful to make agriculture sustainable through appropriate recommendations and resources for promotion of necessary infrastructure," the source said.

The Commission is to submit its report on determining the transfer of revenues and allocation of Grants-in-Aid of revenues of the States by April 1,2019. The recommendations of the Commission will be applicable for the period 2021-22 to 2022-27.