The 15th Finance Commission on Thursday said there was "no intention" to penalize, in terms of devolution of funds, states that achieved better performance.
Finance Commission Chairman NK Singh said the Commission would have to give "further thought" to use of population criteria for central devolution, but maintained that it would "technically not" consider using a mix of census figures.
"I can see the apprehensions the states have on use of population criteria. We have been asked to use the later census figures," he said.
The earlier Finance Commission had been asked to use the earlier census figures and they were obliged to do so, Mr Singh said.
"However, in their (14th Finance Commission) recommendations, two things happened. First, they chose a mix of the two census figures of 2011 and 1971. If you are going to suggest to us, if we would consider using a mix, technically perhaps not. I am not ruling that out but the fact remains that we have been asked to use figures of the latest census. If we were asked to use, or left it to us of what to use, that's a different matter," he told chief minister N Chandrababu Naidu while addressing a meeting at the Secretariat.
"I can see the apprehensions the states have not only on this issue. Is governance about perpetuation of poverty or bringing about prosperity? There is no doubt, it is about bringing prosperity. But, there again, it has nothing to do with the FC that we have been asked to use the later census figures," he observed.
"That's an area in which the commission has to give further thought," he added.
Also, he said, the commission has not been asked to assign any fixed weightage to population in general.
"After all, the government exists for the people. The money which we have to assign belongs to the people of India and that money is meant for improving the life quality of the people and the opportunities. That is a fundamental issue," Mr Singh said.
He said it was not the FCs intention to penalize states which have achieved better performance.
"There is another aspect in the terms of reference (ToR) which has not formed part of the main devolution criteria, but when it comes to performing and rewarding states, states which have achieved demographic management in one aspect...which the ToR has asked us to use. Therefore, the FC is quite at liberty to use that and to be able to use that in a manner where this shall not result in this kind of an outcome," Mr Singh said.
On the issue of continuation of revenue deficit grants, he said the consultation process with state governments was still continuing.
Commission members Shakti Kant Das, Anup Singh, Ashok Lahiri, Ramesh Chand, Andhra Pradesh Finance Minister Yanamala Ramakrishnudu, Chief Secretary Anil Chandra Punetha, Finance Secretaries M Ravichandra, Peeyush Kumar and other top officials were part of the deliberations.
The commission members also interacted with leaders of various political parties to elicit their views on the devolution of funds.