HEADLINES:
November 15 2019
States allocation: panel sticks to 2011 census
18 February 2019

Proposals will impact Central Budget and those presented by States for 2020-21, says N.K. Singh

The 15th Finance Commission will not alter its approach on solely using the 2011 Census for population figures in its calculations for allocations to States, Chairman N.K. Singh said in an interview.

However, he added that other measures would be included that would ensure that States that have performed well by controlling population growth would not be penalised.

“The final decision is that, as far as we are concerned, the Commission is a recipient of the Terms of Reference (ToR),” Mr. Singh said. “It is not the creator of the Terms. Having received the Presidential Order, we are obligated by the Constitution to act on the basis of the Presidential Order. It is very clear that wherever population has to be used as a criterion, that population should be what is in the Census of 2011.”

“The ToR also do say [we are] to look at incentives for States that have achieved success in terms of replacement rates and better demographic management,” Mr. Singh added. “So we will be looking at that. The intention of the Commission is to try and see that in no way is efficiency and performance penalised, so we will try to see what kind of a balance we are able to come up with.”

The panel will be visiting Telangana on Monday, which would take the total number of States so far visited to 19. After Telangana, the Commission is scheduled to visit Rajasthan. “It is a race against time,” Mr. Singh said.

“There is an order from the President that by November 1 our report is expected. We will try to conform to that deadline to the extent possible. The point is that flexibility is very limited in the sense that our report will be an overarching factor for the first regular Budget of the new government, that is, the Budget presented in 2020.”

He said that the recommendations of the Commission, especially to do with the quantum of devolution to the States, will have a bearing on not only the Central Budget but also those presented by the States for the year 2020-21.

States’ finances weaker

In general, State finances are in a weaker position than the Centre’s, but we need not be in a celebratory mood regarding the Centre’s finances either. he said. Perhaps for very good reasons, they have kicked the can on the fiscal deficit and debt targets down the road.

The Chairman, however, said the Commission had not yet finalised whether it would be altering the previous Commission’s recommendation that 42% of the Centre’s tax revenue be shared with the States.

“The truth is we have not decided about the 42% devolution amount,” Mr. Singh said. “It has not been decided for many reasons, but the most important is that we are still waiting for the submissions of the Central government. It has to come very soon. Unless we get the Central government’s requirements and calculation, we can’t decide on it.”

 

 

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