For the first time in our Nation, a controversy of sorts has erupted about the terms of reference of the Finance commission – a body that most Indians, even the educated elite, have not even heard about and those who did never bothered much. The 15th Finance Commission was constituted late last year under the chairmanship of N.K. Singh and its most telling role was to come up with the ratio in which the tax money that the central government raises gets divided among the states. This is ordinarily a boring task that few people are interested in. The commission recently released a public notice in all newspapers, seeking suggestions from individuals and organizations for the very same but the interesting thing to note is that one of the terms of reference was that ‘the Commission shall use the population data of 2011 while making its recommendations’ contrary to the 1971 census used all this while. One might wonder why making use of a newer scheme shouldn’t be entertained.
After 1971 all the states had unanimously agreed to control their population and while some states succeeded there are several that still haven’t. If we have to go by the 2011 census we can identify certain Northern states such as UP, Bihar and Rajasthan who has had a 20-30% growth in population while the Southern states have limited themselves to under 16% and Kerala at 4.9%.
The Finance commission now aims to distribute the resources and privileges based on the current population charts rather than the old one, meaning states with a larger population automatically gets entitled to more tax privileges simply because of their larger index. In 2001, to avoid this very scenario the Vajpayee government has put a prohibition on using any census later than 1971 for the purpose of apportioning Lok Sabha seats among states and ensured the same should continue for another 25 years which means the current Modi government cannot implement this scheme until 2026.
From a Le Man’s point - the larger population is actually an evidence of government failure. It should not become a virtue and when we speak in terms of incentives, no state will have an incentive to have enlightened and progressive policies when it comes to the population if the consequence of that is that it ends up paying a heavy financial price when central taxes are apportioned. When we look at the current scenario a regular South Indian tax payer has a return of 0.47 Rs for every 1 rupee of tax he pays while a North Indian receives 1.79.
There is a mounting degree of concern regarding this issue and that is why DMK Leader Mr Stallin has written to ten Chief Ministers and to the Prime Minister himself, Kerala Finance Minister Thomas Isaac has written to all other southern Finance Ministers, The Karnataka Chief Minister Mr Siddaramaiah has issued a Facebook post in detail about the very issue and Mr Pawan Kalyan opposition leader in Andhra Pradesh has also spoken about this issue.