Finance Ministers to discuss wider range of issues

Finance Ministers to discuss wider range of issues

Context:

• Andhra Pradesh will be soon hosting a second round of Finance Ministers’ conclave on May, 7th in Vijayawada.

Salient features of the second edition of the Finance Ministers conclave:

• The horizons of the second edition of the Finance Ministers conclave are being widened to pave way for the participation of other States such as Mizoram, Odisha, Punjab and Delhi.
• Tamil Nadu and Telangana, which skipped the first meeting at Thiruvananthapuram, are also expected to take part in the meeting.
• The meeting will also decide the course of action such as submitting a representation to Union Finance Minister Arun Jaitley or President Ramnath Kovind.
• The meeting is aimed at discussing the adverse terms of reference in the 15th Finance Commission.

Consequences of implementing terms of reference (ToR) in the 15th Finance Commission :

• Every State would be at the receiving end if the ToR were to be considered.
• The ToR is considered as a deliberate attempt to forcibly impose conditions on and cut down tax devolutions.
• It was expected that States would lose about Rs 80,000 crore per annum.
• Tamil Nadu would be the worst affected by the ToR’s recommendation to use the 2011 census.

Way ahead:

• The Centre has plans to do away with the revenue deficit grant, a constitutional right of the States.
• Mere appeals to the States to reduce the tax would not suffice, the Centre should also bring down duties on petroleum products.