The 16 th Finance Commission has been notified with Dr Arvind Panagaria as its chairman, with the following terms of reference.

i. The distribution between the Union and the States of the net proceeds of taxes which are to be, or may be, divided between them under Chapter I, Part XII of the Constitution and the allocation between the States of the respective shares of such proceeds;

ii. The principles which should govern the grants-in-aid of the revenues of the States out of the Consolidated Fund of India and the sums to be paid to the States by way of grants-in-aid of their revenues under article 275 of the Constitution for the purposes other than those specified in the provisos to clause (1) of that article; and

iii.The measures needed to augment the Consolidated Fund of a State to supplement the resources of the Panchayats and Municipalities in the State on the basis of the recommendations made by the Finance Commission of the State.

Unlike the 15th Finance Commission’s terms of reference, the current notification stays away from all controversial references. This might give the commission adequate space to allocate resources to achieve national priorities. While poverty, population, and geographical area have been used as major benchmarks by earlier Finance Commissions, the 15 th FC had a reference to Forest & Ecology carrying a weightage of 10% .

The 13th FC made a special reference to water conservation and management efforts. A statutory autonomous body at the state level could help in addressing these issues.

We recommend setting up of a Water Regulatory Authority in each state and specification of a minimum level of recovery of water charges. The proposed regulatory authority may be given following functions:

i) To fix and regulate the water tariff system and charges for surface and sub-surface water used for domestic, agriculture, industrial and other purposes.

ii) To determine and regulate distribution of entitlement for various categories of uses as well as within each category of use.

iii) To periodically review and monitor the water sector costs and revenues.

The Commission had allocated Rs 5000 crores for the purpose. This , however, did not make a big impact nor was the effort followed up. In any case, water is only one, though major, component of natural resources.

The rapid erosion of natural resources: soil and water in particular, is causing serious concern. While Policy makers are alarmed at the state of affairs in many parts, farmers are worried about the future of agriculture as well. They do understand that they cannot do much individually. They are , as is obvious in some rural consultations, large policy and schematic interventions from the state to set this right. This could soon snowball into a major concern not only of environmentalists, but of farmers.

India’s National and International commitments which include the following have also to be kept in mind:

• Bringing 10 million hectares of land under Natural Farming by 2027

• Restore 26 million hectares of degraded land by 2030 (UNCCD COP 2019)

• Facilitating crop residue management on 4.1 million hectares by 2024 (Outcome Budget 2023-24)

• 33 per cent of India’s geographic area to be covered under forests and tree cover (NAPCC 2008)

• Creating an additional carbon sink of 2.5 -3 billion tonnes of CO2 equivalent by 2030 (UNFCCC 2015)

• Achieving carbon neutrality by 2070

It would not be possible to achieve these targets without allocating additional resources to the states.