Three southern states today demanded reframing the Terms of Reference of the 15th Finance Commission for devolution of funds to states, alleging it was biased and in contradiction to principles of Federalism enshrined in the Constitution.
Union Finance Minister Arun Jaitley rejected the charge of bias against the southern states, asserting there was no inherent bias or mandate in the ToRs which can be construed as discriminatory against the states which made good progress in population control.
Jaitley also said a "needless controversy" is sought to be created that the ToRs are loaded against any particular region of the country. "Nothing could be further from truth", he said in a Facebook post.
In a first-of-its-kind initiative, the finance ministers of southern states that stare at the prospect of drastic cuts in Central transfers in the wake of the ToR met here to discuss the challenges ahead, alleging it was biased against some of the progressive states.
At the conclave, Kerala, Karnataka, Andhra Pradesh as well as the Congress-ruled union territory of Puducherry while opposing the ToR said it was in contradiction to the principles of Federalism enshrined in the Constitution and also would result in revenue loss to the performing states.
Among other things, they also strongly opposed the ToR recommendation to use the 2011 census to calculate population for allocation of union tax revenue in place of 1971 census, which was used by the previous Finance Commissions.
AIADMK-ruled Tamil Nadu and TRS-ruled Telangana opted out of the conference, hosted by Kerala to discuss issues of common concern with respect to the 15th Finance Commission.
Briefing reporters on the deliberations, Kerala Finance minister T M Thomas Isaac said a similar conference would be held at Visakhapatnam either in April end or May first week to finalise a memorandum seeking changes in the ToR.
"We will see that Tamil Nadu and Telangana along with more states like West Bengal, Orissa, Punjab and Delhi attend that conference," Isaac said.
On the outcome of the meet, he said the states, which participated, came together on several issues.
The ministers were of the view that there was an attempt to reduce the Centre's share to states through the 15th Finance Commission, he said. "If this is allowed to succeed, states would become a glorified muncipalities".
Inaugurating the conclave, Kerala Chief Minister Pinarayi Vijayan said the heated debates that followed appointment of the Commission was unprecedented because of the 'conspicuous bias' in-built in the ToR of the new commission.
It was widely feared that the ToR framed by the Central Government would prevent the Finance Commission from fulfilling its constitutional responsibility, he said.
"Therefore, it is only proper for all of us to appeal to the Union Government to reframe the terms of reference of the 15th Finance Commission," Vijayan added.
Vijayan said introduction of GST in the country has resulted in erosion of fiscal autonomy of the states.
"We are all aware that the terms of reference of the 15th FinanceCommission has created apprehension about principles of fairness and equity in the distribution of national resources for development," the CPI-M veteran said.
Attacking the BJP-led NDA government, he said the ToR was unprecedented in asking the Commission to consider proposing performance-based incentives beyond those relating to fiscal responsibility, population and devolution to local bodies.
"This reflects the viewpoint and ideological inclinations of the Centralgovernment and are attempts to micro-manage the the fiscal domain of states'," he said.
Backing the southern states, senior Congress leader P Chidambaram in a tweet said the ToR was "seriously flawed" and would adversely affect the better-performing states. Earlier, he had said the Centre has "lit a fire" and that it should be doused before the southern "flames scorch the federation".
Andhra Pradesh Finance Minister Yanamala Ramakrishnudu said the TDP-ruled state was against ToR "unilaterally" stipulated by the Centre without consulting the states demanded it be reframed after discussions.
Puducherry Chief Minister V Narayanasamy said the conference would be an "eye opener" for the union government.
The best performing states are punished and worst performing ones are rewarded, he said, and sought to know how developed states could carry out works if funds were not given to them.
He took a dig at Prime Minister Narendra Modi, saying he talks about co-operative federalism at all meetings, 'but what was actually happening is dictatorship".
"We have to revolt against the Union Government for our rights".
Representing Karnataka, Agriculture Minister Krishna Byre Gowda said his state fully supports the views of other states.
Karnataka was of the opinion that all progressive states, including perhaps all the southern states, have been 'disincentivised' by means of the ToR, he said.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)