Former union secretary EAS Sarma alleged that the centre was attempting to harm the spirit of the federalism which is the core value of the Constitution of India.
Quoting media reports, he said the Finance Commission was considering a proposal to allocate funds among the states on the basis of their performance which he says would negatively affect the states like Kerala and Andhra Pradesh.
Writing a letter to Dr Thomas Isaaq, Kerala Finance Minister, Dr Sarma asked the former to mobilize the opinion of his counterparts to present a collective view of states in order to preserve the federal spirit before it is too late.
Here is the full text of the letter
To
Dr. T.M Thomas Isaac,
Finance Minister
Kerala
Dear Dr Thomas Isaac,
I write this in continuation of my earlier letter dated 27-3-2018 on the TOR for the Finance Commission and its implications for some States like Kerala and AP. Apparently, the affected States could not organise themselves adequately to be able to bring sufficient pressure on the Central government to revise the TOR.
There have been numerous attempts on the part of the present government at the Centre to disturb the delicately poised Centre-States relationship to cause dilution of the idea of federalism that lies at the core of our Constitution. The latest in this is the proposal being actively considered by the Centre to allocate resources among the States on the basis of their performance, as evident from the enclosed news report (“Government’s new road-map for corporate-style governance of states”).
The revenue resources available from different sources including taxation belong to the nation and their allocation needs to be made on need-based terms between the Centre and the States and on criteria-based, equitable terms among the States. In this respect, time-tested norms have evolved over the decades. Had the Centre restricted its activities to essential purposes such as defence, external affairs and security, a greater share of the resources would have accrued to the States. The States’ share of the resources is required to be allocated among them on the basis of the adjusted Gadgil formula for Plan resources and as per the formula prescribed by the Finance Commission for the residual resources. Both the Gadgil formula and the Finance Commission’s allocation take into account factors such as the population of a State, the extent of its physical and economic disadvantages and so on.
Over the decades, the Centre has progressively intruded into many activities that legitimately belong to the State and, in the guise of “Central schemes” and “Centrally Sponsored Schemes”, enlarged its own share in the Plan resources. In addition to reducing the States’ share of resources, this has also resulted in eroding the autonomy of the States, which has serious adverse political implications. The States have been protesting against this but, in the absence of a strong political lobby of the States, the Centre has had its way.
With the demise of the Planning Commission, replaced by its successor, Niti Ayog, the lines between the Centre and the States have got further blurred.
The States are aware of how the present government has even started interfering with the functioning of the statutory institutions and using them as yet another instrumentality to dilute the idea of federalism. No wonder that some States have tried to hit back by going to the equally extraordinary length of imposing a ban on the operation of some of those institutions in their respective areas. Such trends do not augur well for the well being of the nation.
The latest proposal that should cause some worry to the States is the proposal of the Centre to link allocation of resources to the States on the basis of their performance. This will not only militate against the concept of federalism that is embedded in the Constitution but it will also permit the Centre to define performance in a subjective way to benefit some States at the expense of the others. It is possible that the performance of a State gets hampered by inequitable interventions from the Centre and that will penalise the State for no fault of its own.
States like Kerala, Tamil Nadu and AP are aware of how the present NDA government had unilaterally altered the TOR of the present Finance Commission that would unfairly affect some States. There is no guarantee that the Centre will adopt a similar stance in the case of its latest proposal. The Centre cannot take decisions unilaterally without taking the States into confidence.
More importantly, the States are as important as the Centre in the scheme of things envisaged in the Constitution. They have an entitlement to the resources generated from taxation and other means. A rule-based approach to the allocation of the resources between the Centre and the States and a rational formula for allocation of the resources among the States is a sine qua non of a federal democracy like ours.
I would appeal to you and your counterparts in the other States to study the latest proposal that is taking shape at the Centre and mobilise opinion among the States to put forward a States’ collective view so as to uphold the spirit of cooperative federalism that forms the basis of the democratic system envisaged in the Constitution.