Letter to BS: 15th Finance Commission faces a minefield of issues

A contour, not the limit

I refer to the article of in Business Standard by Ajay Chhibber titled, “A minefield of issues” (April 9). I cannot agree with the conclusion of his article that the terms of reference to the 15th Finance Commission might undermine the positive momentum towards cooperative federalism.

The first issue according to him is the directive to the Commission to use the 2011 Census rather than the 1971 Census. He has referred to some difficulties that it would create notable being the growth of population in the South and even in West Bengal being lower than in other states which will get the more successful states less allocation. The second issue is the direction to the Commission to consider the higher devolution of resources to the states. The third issue is to consider the expenditure by states on populist measures. He asks what is populist. The final issue is that the Commission has been asked to find ways to encourage the “ease of doing business”.

I wonder how one can say that considering all these references can lead to any adverse effect on the cooperative federalism. I agree that the issues referred to the Commission are indeed very complicated. But the Commission gives a very wide chance to the states to represent their views. Population issue is only one of the issues and it is to be seen along with the emigration of interstate population. If the 1971 Census (47 years old) was allowed to be the basis, it would have been itself a source of rigidity. Moreover the Commission can always use any other rational criterion. The terms of reference is only the contour and is not a limit. An unilateral decision by the Central government would have gone more against the concept of cooperative federalism.

Sukumar Mukhopadhyay  New Delhi


Ajay Chhibber responds:

If terms like populism are to be added to the ToR's of the Finance Commission why not also include cronyism. Farm loan waivers are considered populist but then what about the lakhs of crores written off in state banks from willful default by well-connected corporate borrowers. Should the Finance Commission be asked to look into these huge costs to the taxpayer out of the Union budget. Or for that matter the costs of loss making PSUs like Air India.

The ToRs of the Finance Commission, in the spirit of growing cooperative federalism need to be written in a less top-down directive and more neutral manner. That said I am hopeful the competent and experienced members of the Commission will provide recommendations and solutions that will take the country forward.