CPI-M calls 15th Finance Commission TOR biased, demands amendments

Hyderabad, April 20 (IANS) The CPI-M on Friday expressed deep concern over the "anti-federal and anti-democratic underpinnings" of the Terms of Reference (TOR) of the 15th Finance Commission and demanded they be amended.

The Communist Party of India-Marxist (CPI-M) also accused the Bharatiya Janata Party (BJP)-led Union government of trying to utilize the 15th Finance Commission to "further centralise financial powers".

The party adopted a resolution to this effect at the ongoing 22nd Party Congress here while observing that the TOR were "intended" to reduce the share of the states in the overall tax devolution and "squeeze the fiscal space" available to them.

The resolution also took strong exception to one of the terms of reference which speaks of "control or lack of it in incurring expenditure on populist measures", saying: "Whether a programme is populist or not is a decision to be made in the political domain and not by the Finance Commission."

"The TOR suggest that the 15th Finance Commission should review the recommendation of the 14th Finance Commission to raise the share of states in central taxes to 42 per cent. Further, they ask whether the constitutional provision to provide revenue deficit grants to states be continued at all. The policies that follow from both of these will certainly reduce resource devolution to the states.

"There are clear suggestions that the Finance Commission enforce the recommendations of the Fiscal Responsibility and Budget Management Act Review Committee Report. Any such move will significantly reduce the fiscal deficit and debt-GDP ratio permitted for the states, and will severely curtail the fiscal space available to states," it added.

The resolution expressed concern that shifting the base year for calculation of population weight from 1971 to 2011 in the TOR of the Commission would result in "heavy loss of revenue to states that have effectively implemented appropriate health and family planning programmes", including the southern states, West Bengal, Odisha and Punjab. 

"There is a bias in the TOR towards giving primacy to central government programmes. It may also be noted that the objectives of most of these centrally-sponsored programmes fall within the domain of the states," it claimed.

Noting that the fiscal imbalance between the Centre and the states has widened over time as from the 11th Finance Commission onwards, the central grants have "increasingly tended to be subject to conditions imposed on the states", the CPI-M said that the adoption of GST has been a "blow to the resource mobilisation potential of the states". 

"The 22nd Congress of the CPI-M appeals to the people to rally to demand amendments to the TOR, in order that the 15th Finance Commission, which is a Constitutional body, be able to function in a free and just manner," it said.