Finance Commission is Centre's handmaid: Dr K K George

KOCHI: Kerala has been at the receiving end of the priorities of Finance Commissions for quite long. The political class in the state, however, has been soft peddling the issue despite timely warning by economists about the perilous situation. Dr K.K. George, a former professor of Cochin University of Science and Technology and current chairman of the Kochi-based Centre Socio-economic and Environmental Studies, has been arguing that the Finance Commission’s needed to regain their constitutional identity for more than a decade. Dr George has pioneered a study in the subject from the 12th Finance Commission  Dr George initiated a study into the workings of the Finance Commission and its adverse impact on Kerala in 2006 after the release of the 12th Finance Commission report.

The working paper, which he co-wrote with K.K. Krishnakumar and V.K. Praveen,  titled Twelfth Finance Commission’s Award; what it foretells for Kerala,details the pitfalls contained in the recommendations for getting adequate central funds to the state. The paper found that the award of the 12th finance commission resulted in the state losing Rs 6,088 crore during the five-year period from 2005-2010. The study also found out that the sharp fall in the percentage of the central transfer to the state has adversely impacted Kerala. 

According Dr George’s paper, during the 11th Finance Commission “the share of Kerala in total Central transfers to all states came down to 2.8 per cent from 3.4 per cent under the award of the Tenth Finance Commission.” The fall resulted in the state losing '3,664 crore in the five year period from 2000-2005.   “The Twelfth Finance Commission reduced Kerala’s share still further to 2.6 per cent. As a result, during the period, 2005-10 covered by its award, Kerala will be getting Rs 6,088 crore  less than what it would have got under the award of the Tenth Finance Commission,” the working paper pointed out.

Erosion of the Role of Finance Commission
Dr George and Krishnakumar revisited the subject with another working paper in 2008 titles Regaining the Constitutional Identity of the Finance Commission: A Daunting Task for the Thirteenth Commission.  The paper was an attempt to delineate the pattern in the erosion of the functional autonomy of the Finance Commission’s over the years.

The study also drew attention to the fact that the Finance Commissions have become a handmaiden for the Central Government cutting down the financial autonomy of the states. The Finance Commission is appointed by the President in every five years or earlier under Article 280 of the Constitution. Conceived as a semi-judicial entity the commission has been entrusted with the “twin responsibilities of apportioning Central Government revenues between the Centre and the States on the one hand and among the individual States on the other”.