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Andhra CM Chandrababu Naidu hosts conclave of finance ministers in Amaravati
Just four days ahead of the crucial Karnataka Assembly elections, Andhra Pradesh Chief Minister Chandrababu Naidu, who has been spearheading the stir against `injustice' done by Prime Minister Narendra Modi to Andhra Pradesh by not honouring commitment made during 2019 polls and also in the AP Reorganisation Act, has now emerged as a big challenger at the national level.

The Conclave of Finance Ministers to deliberate on the impact of the terms of reference (ToR) of the 15th Finance Commission on fiscal federalism, held in Amaravati on Monday, was represented by as many as 11 states. This will be biggest official conclave held against Narendra Modi, during last four years.

Chandrababu Naidu said that the terms of reference of the 15th Finance Commission almost penalises states for being progressive and well-performing. States that are good at population control will be in debt.

"South Indian states, in particular, who have been reportedly good at population control, will be affected. The few seats that South Indian MPs have in the parliament will soon not be ours. The little voice we have, will soon go away", he added.

He expressed hope that the common memorandum that we will work on today acts as a starting point for fresh thinking in regard to devolution in recognition of the growing reality of states being more than equal partners in development of the country. Referring to post-bifurcation problems, he said that Andhra Pradesh has received unjust behaviour from the Centre since a long time.

"But we have still managed to address the need of gas, electricity, water and LED bulbs on our own. Poorly performing states must be uplifted, but not at the cost of progressive states. A new paradigm for devolution must be established in the spirit of partnership between Centre and States, and not based on dominance of the former over the latter, " he said.

Quoting the Fiscal Responsibility and Budget Management Act, Naidu said, "The central government is borrowing a lot of money. But they are not allowing us to. How is this fair? The 15th FC has been asked to determine whether the States are controlling the expenditure on populist measures. The obvious question that arises is why should the Centre too not be assessed through the same lens? We must stand up and prevent the significant hardship that states will face is the 15th FC will be put in place. The ToR weaken the very cause of cooperative federalism."

He further said, "India will prosper only if all the States prosper. The Finance Commission has to see that in the absence of adequate financial resources, efforts of poverty alleviation take a beating, preventing the poor to rise economically."

Apart from working together against tendencies of Modi, they have also decided to meet President Ramnath Kovind, urging him to reframe the ToR in order to prevent a federal imbalance of the country. Chief Minister of Puducherry, V. Narayanaswamy, who raised the point that the ToR should contain a paragraph to include provisions for union territories also.

"The present ToR indicate a move towards central discretion in the release of funds to States. What the States want is the opposite. We want a financial regime in which there is a decisive move away from discretionary to assured devolutions", he added.

Manish Sisodia, the Deputy Chief Minister of Delhi, said that the 15th Finance Commission will only lead to a centralised path to development. He expressed his support and agreement with the cause of the conclave, and said he looks forward to participate in drafting the memorandum.

Amit Mitra, Finance Minister of West Bengal said that resistance to this Finance Commission is vital, as the ToR are in violation of fundamental constitutional values.

"States are facing massive revenue deficits", he said. "I also want to highlight the non-payment of fund release by the Centre. West Bengal has not received Rs 9,958 crores. We are forced to borrow from the market to keep our basic government initiatives running. We need to resist this forced ceiling placed on states' ability to borrow. These terms of reference are a part of undermining the federal structure. And to my knowledge, other Chief Ministers too have written to Prime Minister Narendra Modi regarding their concerns about the 15th Finance Commission", said Mitra.

Finance Minister of Punjab, Manpreet Singh Badal spoke about the impact of GST-related changes, and explained that Punjab is a consequence of many industries migrating away during the partition.

"We need to take care of power subsidies, food security and facilities that we assure our people. The ToR acts as an impediment, and is violative of at least Articles 270 and 285."

According to AP Finance Minister Yanamala Ramakrishnudu, the 14th Finance Commission, introduced idea of using the population data from census 2011 for the first time in a small way by giving it a weightage of 10 per cent while arriving at the formula for devolution of the divisible tax pool. This adversely affected fund flow to states which have implemented the family planning program in earnest. The use of population from census 2011 by 15th FC with a greater weight for determining the allocation of funds to the States would cause great injustice to the States. This approach would penalise states which have shown declining fertility rates and lower population growth over the past four decades, he added.

Secondly, he said that they are all aware about the division of the powers of taxation and borrowings between the Centre and the states. The states can rarely match their resources with the development needs. States are required to put in place the necessary enabling conditions such as the provision of adequate infrastructure to attract private investments. This involves incurring capital expenditure. The use of 2011 census population figure would result in reduction of the share of majority of the states. If devolution gets reduces, it is bound to increase fiscal and revenue deficits of States.

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