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15th Finance Commission: Southern States to Lose Rs 16,639 Cr : EAS Sarma

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Dr EAS Sarma IAS (rtd)

In my earlier correspondence  to Rashtrapatiji and the State governments, I had pointed out how the present government at the Centre was trying to make inroads into the autonomy of the States and how it unilaterally introduced a crucial change in the Terms of Reference (TOR) of the latest Finance Commission, that could adversely affect the resources allocable to the Southern States. 

As it was expected, it appears that the 15th Finance Commission has finalised its recommendations which not only scale down the States’ share in resource allocation from 42% to 41% but also have the effect of reducing the individual States’ shares specifically in the case of Karnataka, Kerala, Telangana and Andhra Pradesh as follows.

State14th FC

Share(%)

15th FC

Share (%)

Reduction

in %

Reduction

(Rs/Crores)

AP4.3054.111-0.194-1521.300
Karnataka4.7133.646-1.067-8367.210
Kerala2.5001.943-0.557-4367.880
Telangana2.4372.133-0.304-2383.900

In other words, the four southern States lose Rs 16,639 Crores in comparison with what they were entitled to as per the previous Finance Commission’s award. This is compounded by the fact that the States as a whole will get 1% less from the total pool.

It may also be noted that, for no fault of theirs, the States have also been put to considerable fiscal stress as a result of the substantial shortfall in GST accruals.

In addition to weakening the financial capacity of the States, which has an adverse impact on their autonomy, by its policies that have often intruded into the legitimate Constitutional domain of the States, the Centre has taken taken several decisions in the recent months that would weaken the States’ role in governance.

In my view, federal polity is an essential element of the basic structure of the Constitution. Any attempt to tinker with it does not augur well in the long run for the well being of a diverse nation like ours.

(Contents of the letter Dr EAS Sarma wrote to Andhr Pradesh Chief Minister YS Jagamohan Reddy)