Finance panel may use 1971 census data too for devolution of funds

New Delhi: In an attempt to douse the protests by the southern states, the 15th Finance Commission (FFC) is likely to partially use data from the 1971 census along with the 2011 census while allocating resources among states to retain parity between southern and northern states.

“We may use 1971 census data to incentivize states for efforts and progress made in moving towards replacement rate of population growth. The weightage may be substantially higher than other incentives so that southern states don’t feel let down. However, a final decision about various weightages is yet to be taken,” a Finance Commission official said under the condition of anonymity.

The central government’s mandate in the terms of reference (ToR) of the FFC to use 2011 population data has become a political issue with the southern states opposing the move as they have been more successful in stabilizing their population growth compared to their northern counterparts with higher population growth rates.

Among major states, Bihar (25.1%), Chhattisgarh (22.6%) and Jharkhand (22.3%) have the highest decadal (2000-2011) population growth rates, according to the 2011 census. On the other hand, southern and eastern states like Andhra Pradesh (11.1%), West Bengal (13.9%) and Odisha (14%) have among the lowest decadal population growth rates.

After the 10 April Thiruvananthapuram conclave of southern states, which was attended by Kerala, Karnataka and Andhra Pradesh and Union territory Puducherry to protest against the ToR, more states like West Bengal, Punjab and Delhi have agreed to join the Vijayawada conclave of finance ministers on 7 May to oppose the ToR of the FFC.

Andhra Pradesh finance minister Yanamala Ramakrishnudu in a statement on Sunday said finance ministers and secretaries of the participating states will discuss the concerns on ToR of the FFC and adopt a resolution that will be sent to President of India. “AP alone would lose Rs8,000 crore per annum because of 15th Finance Commission’s ToR to use 2011 census for devolution of funds,” he added.

Speaking at an event last week in Mumbai, FFC chairman N.K Singh said the Commission’s effort will be to strike a balance between rewarding efficiency and taking care of equity.

“What weightage to be given to population has been left entirely to Commission’s judgement. Equally, there is a terms of reference which says incentivizing states which have achieved great success on demographic management and replacement rate of population. One can look at a formula which combines rewarding both efficiency and looking after issues of equity,” he added.

Speaking on the matter, Prime Minister Narendra Modi last month said the allegation of favouring northern states over southern states was “baseless”. Union finance minister Arun Jaitley had also called the controversy “needless”. He said although the 14th FC had no specific mandate for using the 2011 census, yet it rightly allocated 10% weight to 2011 census population data to capture the demographic changes since 1971 to make a realistic assessment of the needs of states.

FFC is chaired by former revenue secretary Singh, also a member of the ruling Bharatiya Janata Party. Apart from Singh, members of the commission are former economic affairs secretary Shaktikanta Das and adjunct professor at Georgetown University Anoop Singh and former chief economic adviser Ashok Lahiri. NITI Aayog member Ramesh Chand is a part-time member.

The commission, whose recommendations will be in force for five years starting 1 April 2020, has been asked to submit its report by 30 October 2019.

The commission has already completed visits to Arunachal Pradesh, Assam, Haryana and is scheduled to visit Kerala by end of this month.