Chandrababu Naidu hosts conclave of finance ministers in Amravati

Andhra Pradesh Chief Minister N. Chandrababu Naidu, on Monday, hosted the Conclave of Finance Ministers in state capital Amaravati, wherein the impact of the Terms of Reference (ToR) of the 15th Finance Commission (FC) on fiscal federalism was stressed upon.

Andhra Pradesh Finance Minister Yanamala Ramakrishnudu presented his analysis of the ToR of the 15th Finance Commission, saying, "We are happy to have the participation of so many states in this unified fight to discuss the draft common Memorandum, to be submitted to the Honourable President of India, urging him to reframe the ToR in order to prevent a federal imbalance of the country."

 

"The use of population from census 2011 by 15th FC with a greater weight for determining the allocation of funds to the States would cause great injustice to the States. This approach would penalise States which have shown declining fertility rates and lower population growth over the past four decades," he said.

"We are also aware of the division of the powers of taxation and borrowings between the Centre and the States. The States can rarely match their resources with the development needs. States are required to put in place the necessary enabling conditions such as the provision of adequate infrastructure to attract private investments. This involves incurring capital expenditure," he added.

He spoke about other key concerns of the ToR and was followed by Chief Minister of Puducherry, V. Narayanaswamy, who raised the point that the ToR should contain a paragraph to include provisions for union territories also.

"The present ToR indicates a move towards central discretion in the release of funds to States. What the States want is the opposite. We want a financial regime in which there is a decisive move away from discretionary to assured devolutions," he said.

Delhi Deputy Chief Minister Manish Sisodia said the 15th Finance Commission will only lead to a centralised path to development. He expressed his support and agreement with the cause of the conclave and said he looks forward to participating in drafting the memorandum.

Amit Mitra, Finance Minister of West Bengal, said resistance to this Finance Commission is vital, as the ToR are in violation of fundamental constitutional values.

"States are facing massive revenue deficits", he said. "I also want to highlight the non-payment of fund release by the Centre. West Bengal has not received Rs 9,958 Cr. We are forced to borrow from the market to keep our basic government initiatives running. We need to resist this forced ceiling placed on states' ability to borrow."

"These terms of reference are a part of undermining the federal structure. And to my knowledge, other Chief Ministers have also written to Prime Minister Narendra Modi regarding their concerns about the 15th Finance Commission", said Mitra.

Finance Minister of Punjab, Manpreet Singh Badal spoke about the impact of GST-related changes and explained that Punjab is a consequence of many industries migrating away during the partition. "We need to take care of power subsidies, food security and facilities that we assure our people. The ToR acts as an impediment, and is violative of at least Articles 270 and 285."

The Chief Minister then addressed the conclave and appreciated the remarks made by all the Ministers. He welcomed the economic experts, secretaries and advisors, and said, "I hope that the common Memorandum that we will work on today acts as a starting point for fresh thinking in regard to devolution in recognition of the growing reality of States being more than equal partners in the development of the country."

"The Terms of Reference of the 15th Finance Commission almost penalises states for being progressive and well-performing. States that are good at population control will be in debt."

"South Indian states, in particular, those that have been reportedly good at population control, will be affected. The few seats that South Indian MPs have in the parliament will soon not be ours. The little voice we have will soon go away", he said.

Referring to post-bifurcation problems, he said that Andhra Pradesh has received unjust behaviour from the Centre for a long time. "But we have still managed to address the need for gas, electricity, water and LED bulbs on our own."

"Poorly performing states must be uplifted, but not at the cost of progressive states. A new paradigm for devolution must be established in the spirit of partnership between Centre and States, and not based on the dominance of the former over the latter."

Quoting the Fiscal Responsibility and Budget Management Act, he said, "The central government is borrowing a lot of money. But they are not allowing us to. How is this fair? The 15th FC has been asked to determine whether the States are controlling the expenditure on populist measures. The obvious question that arises is why should the Centre not be assessed through the same lens? We must stand up and prevent the significant hardship that states will face is the 15th FC will be put in place. The ToR weakens the very cause of cooperative federalism."

He added, "India will prosper only if all the States prosper. The Finance Commission has to see that in the absence of adequate financial resources, efforts of poverty alleviation take a beating, preventing the poor to rise economically."

Minister of Finance of Kerala, Dr. T. M. Thomas Issac, who is also an advisor (Communications) to the Government of AP, Dr. Parakala Prabhakar, Member of 14th Finance Commission, M. Govinda Rao, Former Special Chief Secretary (Finance) of AP, V. Bhaskar, finance expert, V. B. Athreya, Vice Chairman of Kerala State Planning Board, V. K. Ramachandran, Director of Gulati Institute, D. Narayana, Principal Secretary (Finance) of Kerala, Dr. Ekroop Caur, Expenditure Secretary of Kerala and Principal Secretary (Finance) Muddada Ravi Chandra were also among the officials present in the meeting.