To forge a unified stand against what the southern States see as a lopsided Terms of Reference (ToR) for the 15th Finance Commission, the horizons of the second edition of the Finance Ministers conclave are being widened to pave way for the participation of other States such as Mizoram, Odisha, Punjab and Delhi. Tamil Nadu and Telangana, which skipped the first meeting at Thiruvananthapuram, are also expected to take part in the meeting to be held in the city on May 7. The meeting will also decide the course of action such as submitting a representation to Union Finance Minister Arun Jaitley or President Ramnath Kovind.
Kerala Finance Minister Thomas Isaac called on his Andhra Pradesh counterpart Yanamala Ramakrishnudu on Sunday to discuss the agenda.
At a press conference on Monday, Mr. Thomas Isaac said every State, including the BJP-ruled ones, would be at the receiving end if the ToR were to be considered. The ToR was a deliberate attempt to forcibly impose conditions on and cut down tax devolutions. It was expected that States would lose about ₹80,000 crore per annum, he said.
The Centre has plans to do away with the revenue deficit grant, a constitutional right of the States. Their fiscal autonomy was a question as the Centre wants to narrow down their borrowing limit to 1.7% of the Gross State Domestic Product (GSDP) from 3% under the Fiscal Responsibility Management (FRBM) Act, he said.
Glorified municipalities
“The Centre is attempting to reduce the States as glorified municipalities with its ill-conceived ToR,” he said. “The BJP-ruled States should understand the realities.”
Tamil Nadu would be the worst affected by the ToR’s recommendation to use the 2011 census, he said. “Tamil Nadu is still a strange case for us. We still don’t understand why it skipped the first conference. It has, nevertheless, lodged its protest against the ToR.”
Telangana did not attend with an apprehension that it was a south-north division. We clarified the purpose of the conclave. “This time, Telangana is expected to participate.”
To a question, Mr. Isaac said the States would reduce the ad valorem tax on petroleum products if the Centre was ready to compensate the loss to that extent. Mere appeals to the States to reduce the tax would not suffice. The Centre should also bring down duties on petroleum products.
