15th Finance Commission chairman NK Singh on Thursday said it may incentivise states with better demographic management as it one of the objectives that it has accepted.

In an exclusive interview to CNBC-TV18's Shereen Bhan, Singh said, "For instance, on the issue of census figures to be used in the terms of reference, where southern states somewhat concerned, I have clarified that we are bound by the terms of reference. We are not the crafters of the terms of reference, we are the recipients of it. The terms of reference are given by the President to the commission and we are obliged to address those terms of reference."

On the tax front, he said, "Tax buoyancy on the direct taxes has been quite robust. However, the tax buoyancy figures, which you have seen so far on the indirect taxes leaves a lot of room for improvement. States have expressed the apprehension that so far the GST outcomes has not been as was expected.

Talking on utilisation of cess, Singh said, "The congruity between the purpose of the cess and the manner of its utilisation, on that I think the central government would need to explain to Parliament as it does each year on the amount of cess, which is collected and the purpose for which the cess has been utilised. The legal opinion is quite clear that there is a constitutional provision which empowers the central government to raise cess and surcharge and which do not form part of the divisible pool. It is also true that in recent year's cesses and surcharges as a percentage of the overall resources to be shared has gone up significantly."