TOR does not inhibit FC in assigning weight to multiple variables: Chairman

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New Delhi : Terms of Reference (TOR) does not inhibit the Finance Commission (FC) in assigning appropriate weight to multiple variables on devolution (of which population is one) and in a combination of rewards and incentives which does not penalise the states which have made significant progress on population front, said Chairman, N K Singh, while addressing a Presser at Thiruvananthapuram on May 31, 2018.

Based on the TOR received, the FC is committed to addressing them. It is committed to an even handed position in regard to centre and states and viewing them in totality without any bias. He said that the Commission will give a report which is fair, rational and reasonable. It has to balance the compulsions of equity and efficiency in terms of a combination of rewards and incentives.

Kerala has made enormous progress in terms of per capita income and in Human Development Index, recognised the Chairman. He placed on record the Commission’s appreciation for adoption of SDGs in the developmental priorities of the state. He appreciated the state government for ensuring high GDP growth rate, dramatic poverty reduction and setting up a model in local self govt institutions. Kerala has set a benchmark in triple devolution of funds, functions and functionaries to the third tier of governance by creating a strong network of neighbourhood groups, according to a PIB release.

The Commission observed some deficiencies in non-utilization of funds leading to lapsing of resources and perhaps a better implementation mechanism. It also sought more information regarding implementation of 5^th State Finance Commission recommendations. There was a strong plea that within three tiers that the District Panchayat which was left out by 14^th FC should be revisited for ensuring the resources to perform obligatory functions.

Kerala CM Pinarayi Vijayan and Finance Minister T M Thomas Issac welcomed the Commission and thanked the members for their visit to Kerala in the early stages of deliberations. In their detailed presentations on state finances, the officials emphasised on enhancing the devolution to the states including a criteria of ‘Demographic Goals Achievement’, continuation of Revenue Deficit grants and compensating the State for the opportunity cost of preserving forest cover, among others.

The Chief Minister submitted a detailed Memorandum to the Commission. An additional memorandum would also be submitted for consideration of the sectoral needs of the State. The FC Chairman complemented the Government of Kerala for making an illuminating presentation to the commission regarding the opportunities and challenges in all the sectors of the economy of the state. He also stated that the issues raised would receive appropriate consideration during deliberation in the Commission.

The 15th Finance Commission is on a 4- day visit to the state of Kerala from 28th May 28, 2018. It concludes its visit by visiting Kochi Metro on May 31.