The work of the 15th Finance Commission may have come under a cloud over allegations that the terms of reference under which it operates may end up favouring northern States more than southern ones, but those are not the only inputs that have come in from across the political spectrum.
Fiscal deficit targets, a financial buffer against rising crude oil prices and funds to deal with floods are just some of the suggestions, even as commission chairperson N.K. Singh has written to Congress president Rahul Gandhi, casting a wider net for ideas.
Nationalist Congress Party (NCP) chief Sharad Pawar was one of the first to write to the commission, flagging his areas of concern as the commission began its task of deciding financial devolution to various States.
Among the many things Mr. Pawar wrote about was a recommendation that a financial buffer be created to insulate the economy from the vagaries of rising crude prices and closer integration into the global economy.
“As far as the Central government is concerned, the rising prices of crude oil in the international market will mean not only higher prices being paid by the consumers but depletion of the foreign exchange kitty and spectre of inflation,” he wrote in a letter to Mr. Singh.
“Prime Minister (Narendra Modi) has taken a stand at Davos, strongly supporting the process of globalisation. However, increasing integration with the global economy would also imply that the ups and downs in the international market will affect the price scenario within the country. This may be inevitable but the commission may have to think of ways and means of containing any shocks to the domestic economy,” he added, concluding his letter, by suggesting that the commission “take a dynamic view of its mandate and concentrate on measures that will enhance and accelerate national development rather than filling gaps in the State budgets.”
Domestic concerns
While Mr. Pawar’s letter addressed larger questions of geo-economics and politics, Bihar Chief Minister Nitish Kumar’s letter to the commission spoke of more domestic concerns.
In a letter to Mr. Singh, he wrote that the 3% target for fiscal deficit under the Fiscal Responsibility and Budget Management Act was “iniquitous” and needed to be reviewed in the specific context of financially challenged States.
Mr. Kumar also said that the State is still waiting for the special financial allocations promised to it under the Bihar State Reorganisation Act of 2000.
Uttarakhand Chief Minister Trivendra Singh Rawat has flagged specific issues pertaining to hilly States and allocations to them.
Financial devolution has become a touchy issue ever since news that the commission’s terms of reference include the 2011 Census as a baseline came to light. With southern States raising concerns over their allocations, sources have told The Hindu that Mr. Singh, after visiting Arunachal Pradesh and Jammu and Kashmir for intensive consultations next month will be visiting Kerala, to soothe tempers and apprehensions.
