Union Finance Minister P Chidambaram has committed grave Constitutional impropriety and has deliberately sown the seeds of confusion in an already well-established mechanism of Financial Transfer from the Centre to the States evolved over the past several years, according to Tamil Nadu Chief Minister J Jayalalithaa.
In a strongly worded letter addressed to Prime Minister Manmohan Singh, excerpts of which were released to the media on Wednesday, Jayalalithaa pointed out that the Finance Commission was the only competent authority to suggest anything on the transfer of funds from Centre to the States while the Union Finance Minister was out to undermine the Finance Commission’s works.
Reacting strongly to the recommendations and suggestions of the Raghuram Rajan Committee for evolving a Composite Development Index of the States, the Tamil Nadu Chief Minister pointed out that the recommendations has been made with an eye to sabotage the 14th Finance Commission which alone has the Constitutional mandate to make recommendations on transfer of funds from Centre to States.
“The background to the constitution of the Raghuram Rajan Committee was the repeated demand of the Government of Bihar to confer Special Category Status on it top enable greater fund flow to the State to address its developmental deficit,” said Jayalalithaa. She said the Raghuraman Committee’s sole mission seemed like punishing States which has made good progress in curtailing growth in population as well as made rapid economic strides through good financial management.
Taking cudgels on behalf of States which stand to lose considerable funds from the Centre, Jayalalithaa pointed out that the Raghuram Rajan Committee had been asked to examine the criteria for devolution of funds from the Centre to the States, a duty laid down under Article 280 of the Constitution for the Finance Commission.
“The Raghuram Rajan Committee Report is a crude exercise which does not recognise the nuances and complexities in Centre-State transfers in India,” said Jayalalithaa.
Jayalalithaa pointed out that as per the Constitution, there has to be a vertical transfer of resources from the Centre to the States and more importantly, a significant proportion of this resource transfer from the Centre needs to be for the continued provision of basic public services in all the States and not just in backward States. “This very important aspect has been completely missed by the committee in its report,” Jayalalithaa said in the letter.
Policy makers in Tamil Nadu point out that the Raghuraman Rajan Committee report comes at a time when all pleas by the State for enhanced allocation of funds has been rejected by the Centre. They also said that if the committee report was implemented, Tamil Nadu stands to lose 50 per cent of the funds which it receives now. They also pointed out that the Raghuraman Rajan Committee Report has been worded in such a manner to punish States headed by non-Congress Governments.