States allocation: panel sticks to 2011 census

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  1. The 15th Finance Commission(FC) 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.
  2. The Finance Commission is a constitutional body appointed every five years by president and consists of a chairman and four other members.15th finance commission is setup under the chairmanship of NK Singh to advise on the basis of Terms of reference(TOR).
  3. Following are the terms of reference (TOR) of the 15th FC:(a) Principles governing the Vertical devolution of taxes between union and states (b) Principles governing the Horizontal distribution of taxes between the states (c) Grant in aid to states and (d) Performance Based incentives for States.
  4. 14th Finance commission had used 1971 Census formula which was given 17% weight i.e. more populous state will get more funds.While, 15th FC will use the 2011 Census data.Since, Southern states have reduced their fertility rate between 1971 to 2011, whereas Northern states could not achieve it.So, southern states fear they will get proportionately less funds, if 2011 Census is used.
  5. Performance-based incentives to the states will be given on following parameters:(a) Efforts made in expansion of GST tax-net (b) Efforts made in achieving replacement level of population growth i.e. Total Fertility Rate 2.1 or lower (c) Controlling the expenditure on populist measures and (d) Behavioural changes to end open defecation.
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