The Finance Commission
(FC) is a constitutional instrument that is entrusted with the responsibility to make recommendations regarding the horizontal and vertical devolution of funds. Any attempt by the Centre to alter the basic structure and functions of the FC, even if its terms of reference are guided by the changing economic landscape and the pattern of Centre-state development endeavor, is therefore, tantamount to a breach of Constitutional obligation. The apprehensions about the terms of reference of the 15th FC on the fairness and equity in the distribution of public resources for development are not unfounded. The proposal of “measurable performance-based incentives” for the states on the pretext of enhancing “fiscal discipline” is against the spirit of federalism
and can jeopardise several initiatives of the state by labeling them “populist”. It is time the Central government
negotiated with the concerned chief ministers to find a reasonable and mutually acceptable solution to their differences.