Kerala Chief Minister Pinarayi Vijayan on Thursday said the federal polity was facing several challenges and many states have been compelled to take legal courses of action to enforce their constitutional rights.
He said this while inaugurating a conclave of state ministers from five states.
“I earnestly hope that this conclave will be a landmark event which will make meaningful suggestions to strengthen the fiscal federal setup of our nation, a unique example to the world of unity in diversity,” said CM Vijayan.
Taking part in the conclave are Tamil Nadu State Finance Minister T. Thennarasu, Karnataka Revenue Minister K.B. Gowda, Punjab Finance Minister Sardar Harpal Singh Cheema and Deputy CM Telangana B.V. Mallu, Kerala Finance Minister K.N.Balagopal, Leader of the Opposition in the Kerala Legislative Assembly V.D. Satheesan, senior officials and experts.
CM Vijayan pointed out that they have got together here to discuss the issues that are to be highlighted before the 16th Finance Commission, which has since commenced its work.
“I would like to recall that a similar conclave, was held in this same venue, seven years back to take a common stand on certain contestable aspects of the Terms of Reference (ToR) of the 15th Finance Commission. I state with satisfaction that the common stand taken by us then, was taken forward by submitting a Memorandum to the Hon’ble President of India and this resulted in many of these items in the ToR not being considered when the 15th Finance Commission submitted its recommendations,” said the Kerala CM.
CM Vijayan further pointed out that this time, the ToR of the 16th Finance Commission has been confined to what has been mandated in Article 280 of the Constitution.
“This was the demand of Kerala when the Union Government had asked for suggestions on framing the ToR of the 16th Finance Commission. As all of us present here are aware, the Finance Commissions recommend a prescribed share of Net Proceeds of the Union collected by the Union to the States. Article 270 of the Constitution, which stipulates this, excludes surcharges and cess collected by the Union from the Divisible Pool of taxes shareable with the States,” said CM Vijayan.
He stated that in the last decade, the surcharges and cess have shown a rising trend and now comprise around one-fifth of the Gross Tax Revenue of the Union and its direct consequence is the shrinkage of the Divisible Pool of taxes.
“The issue of distribution of taxes among the states also needs due consideration. The 16th Finance Commission has the task of delicately balancing the interests of the states, which have a low per capita income and a larger share of the population, and others which have achieved the aim of the National Population Policy, 1976,” pointed out CM Vijayan.
The CM further said that in this act of delicate balancing, the 16th Finance Commission will have to carefully decide on the tax distribution formula and put to use effectively the constitutional provisions of Article 275 for disbursing grants to states in need.
“I am hoping that the experts present here will offer their valuable advice to us in presenting this issue before the 16th Finance Commission,” added CM Vijayan.
He ended his address by pointing out that the past efforts taken by the states have been catalysts in highlighting the problems in Centre-State relations and initiatives for change.
“Milestones in this regard are the P.V. Rajamannar Committee appointed by the government of late Kalaignar M. Karunanidhi in Tamil Nadu, the Memorandum submitted by the Left Front government in West Bengal led by late Jyoti Basu in 1977, demands raised in the Conclave of Chief Ministers in 1983, which resulted in the appointment of the Justice Sarkaria Commission to look into the Union-State relations and the Conclave held here in 2017 demanding reconsideration of certain items in the ToR of the 15th Finance Commission,” said CM Vijayan.
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