Finance Commission’s New Problem: A Separate Defence Fund

The original terms of references for the FFC themselves were contentious. Based on the wrong assumption that the last Finance Commission was overly generous towards the states, the terms were designed to nudge the FFC towards reducing the tax devolution to the states in order to meet the requirements of central schemes of the Union government. If that wasn’t enough, an additional term of reference has now been recommended by the Union cabinet tasking the FFC “to ensure an assured allocation of resources towards defence and internal security imperatives.”

Allocating adequate, secure and non-lapsable funds for the security of India is indeed an urgent priority. There can be no quarrel about that objective. But the move to provide for these funds through the FFC is problematic for several important reasons.

Read the full article on Deccan Herald here.