What is the issue?
- The 15th Finance Commission will be using data from 2011 census for the devolution of taxes.
- Few states have expressed concern over the decision as it would result in lower resource allocation.
What is the role of the Finance Commission?
- The Finance Commission is aconstitutional body created to address issues of vertical and horizontal imbalances of federal finances in India.
- The Finance Commissionis appointed every five years and consists of a chairman and four other members.
- The constitutional mandate of the Finance Commission is
- To decide on the proportion of tax revenue to be shared with the States
- The principles which should govern the grants-in-aid to States.
- Responsibility to make recommendations on various policy issues, as and when they arise.
- The recommendations made by the Finance Commission are advisory in nature and, hence, not binding on the Government.
What is the significance of census in Finance Commission?
- The population figure derived from the census is used for calculating the devolution of taxes to the states.
- However not the entire amount of taxes to be disbursed is based on the population but only a certain percentage of the funds.
- In the case of the 14th Finance Commission, that was 25%.
- The 1971 census recorded an increase in population compared to the pervious censuses and to counter the issue of growing population family planning methods were introduced.
- The 42nd Amendment picked the 1971 Census data as base for all calculations and froze it till 2001 Census.
- This is to equalise the shares and safeguard the states actively undertook the family planning programme.
- In 2001, the 84th Amendment further extended that to the first Census after 2026, which will be the Census of 2031.
What are the concerns of the states on this move?
- Northern states like Uttar Pradesh, Maharashtra and Bihar have more than doubled their population in the intervening years.
- Whereas southern states like Tamil Nadu, Karnataka and Kerala have had relatively slower growthsin population with an exception of Andhra Pradesh.
- The usage of the 2011 Census is being opposed for the same reason the usage of 1971 Census was made mandatory.
- Which made sure states that have worked on population control do not lose out on benefits.
- Thus according to the southern states the decision of the 15th FC to use the 2011 census data is seen as discriminatory and affects the federal structure.
Source: The Hindu
