15th Finance Commission to rethink using 2011 census data for disbursing tax revenues among states

Southern states protest decision, arguing that they will lose revenue as population growth has been faster in the north.

Published: 31st March 2018 06:23 AM  |   Last Updated: 31st March 2018 08:08 AM   |  A+A-

Image used for representational purpose

Express News Service

NEW DELHI: The 15th Finance Commission is re-evaluating using the 2011 census data to distribute its pooled tax revenues among the states, and will go for public discussion in mid-April amid growing protests from the southern states, which feel that the system is rigged against them.

“We have had several dialogues in the last few days with members of Parliament. We are also taking into account concerns raised by the southern states. We will be re-evaluating the process if required,” one of the members of the 15th Finance Commission told The New Indian Express.

The newly constituted 15th Finance Commission, under the chairmanship of N K Singh, had said that it would take into consideration the 2011 Census for distributing the pooled tax, and not the 1971 Census numbers considered by previous Finance Commissions.

This sparked a controversy, as the southern states felt that they would be big losers if the 2011 census was taken into consideration for distributing pooled tax revenues, as population growth was faster in the northern states.

“The states of the south have nearly reached replacement levels of population growth. Yet population is a prominent criterion for devolution of Central taxes. For how long can we keep incentivizing population growth? While I recognise the need for correcting regional imbalances, where is the reward for development?” Siddaramaiah, Chief Minister of Karnataka, wrote in a Facebook post. His concerns found support from his southern peers.

On March 20, M K Stalin, working president of the Dravida Munnetra Kazhagam, tweeted: “The government's unilateral decision contradicts the principles of federalism and States could be reduced to that of a municipality, I urge the Centre to frame a new ToR in consultation with all the States and GST Council.”

“The (finance) commission will have deeper engagement with the states. We will find a way out. Also, by mid-April, we will go for public opinion on the issue from major economists and public policy experts,” the member said.



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