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Bhubaneswar: Alleging major departure with regard to 'population' as a criterion for sharing of resources under the 14th Finance Commission, the Odisha government today said the move would adversely affect resource transfer to 11 states and demanded steps to restore the previous norm.
"If the Finance Commission takes into consideration demographic changes that have taken place after 1971, then it is going to adversely affect the level of resource transfer to 11 states which took progressive steps to arrest rapid growth of population," Chief Minister Naveen Patnaik said in a letter to Union Finance Minister P Chidambaram.
Patnaik said the Presidential order on Constitution and terms of reference of the 14th Finance Commission have made significant departure from that of previous commission with regard to "population" as a criterion for determination of horizontal devolution among states and grant-in-aid.
Stating that population criterion is not only used for determination of inter-se share of devolution of central taxes, but also for computation of fiscal capacity distance as well as fiscal discipline, Patnaik said it is explicitly used for determining a state's share and implicitly used to scaling other parameters in determination of its share.
"It has a much greater impact than what is visible and any sudden or unexpected change will impact the predictability in transfer of resources from the Centre under the aegis of the Finance Commission," the Chief Minister said.
Compared to others, 11 states - Andhra Pradesh, Assam, Chhattisgarh, Goa, Himachal Pradesh, Karnataka, Kerala, Odisha, Punjab, Tamil Nadu and West Bengal - whose population registered a moderate growth since 1971 would suffer significant loss in devolution if 2011 population is adopted, he said adding subsequent Finance Commissions may also follow this precedent. .
Stating that population enters the Finance Commission computations in two areas - as an independent parameter and as a scaling factor, Patnaik said even if in one of these cases the use of 1971 population is discarded, half of its incidence is lost and it can no longer be said to be generally compliant.
If the 14th Finance commission choose to go by the terms of reference and takes into consideration the demographic changes that have taken place after 1971, it would adversely affect the level of resource transfer to 11 states, including Odisha, which took progressive steps to arrest the rapid growth of their population, the Chief Minister said.
"I would, therefore, request you to take steps to restore the population criterion of the previous Finance Commission," Patnaik said.
