Finance Commission would listen to views of all, says chairman Panagariya

The 16th Finance Commission is open to listening to the views of all states and consider all possibilities, including their grievance on facing a cut in central allocations despite better performance on the economy front, the Commission's Chairman Arvind Panagariya said on Tuesday.

Panagariya, who is on a visit to Telangana along with the other members of the Commission as part of the panel's state visits, said it was expected that better-performing states would generally say that (they faced a reduction in central allocations).

"That (states which made progress saying their allocations declined) is to be expected. At least so far, what we have seen, in two of the states, Karnataka and Telangana, we have heard that," the economist told reporters here.

Asked for his response to the issue, he said, "The Commission is open to listening to everything. The Commission will think about all possibilities. What we will do in the end, I can't tell, because I don't know".

The Commission had separate meetings with the Telangana government led by Chief Minister A Revanth Reddy, representatives of political parties and local bodies here during its state visit since Monday.

Panagariya said there was a lot of emphasis on taking into account Telangana's contribution to the national GDP and to give an important place to the state's GSDP in deciding upon the horizontal division of the funds among the 28 states of the country.

"It was very similar to what we also heard in Karnataka. At this stage, for the Commission, it's early in the game. So, we really don't know where we are going to come out eventually. We still have 22 more states to visit. But, that was the pitch of Telangana state," he said.

Five opposition-ruled states -- Kerala (Left), Karnataka and Telangana (Congress), Tamil Nadu (DMK), and Punjab (AAP) -- have decided to hold a conclave on September 12 to seek a fair deal for their fiscal needs in the upcoming 16th Finance Commission.

To a query if the Commission would consider raising the percentage of devolution (in favour of the states) as the Centre is understood to reflect economic buoyancy, he declined to comment at this stage.

Asked whether the Commission would develop any mechanism to streamline the issue of dispute between the central government and states on cess and surcharges, Panagariya said only the union and state governments together can evolve any progress on the matter as it requires a Constitutional amendment.