Budget 2023-24: Kerala FM hopes for better fiscal policy for states

Kerala Finance Minister KN Balagopal is hopeful that the Union Budget will allocate more funds for social and infrastructure development and correct the Centre’s fiscal policy for states.

The Left leader is known to be critical of the Centre’s approach towards the states in terms of GST implementation and devolution of central funds. He added that the “serious discrimination” towards Kerala should be stopped.

In an interview to news agency PTI, Balagopal said the Centre’s approach has led to a financial crisis in the state, affecting development.

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Union Finance Minister Nirmala Sitharaman will announce the 2023-24 Budget on February 1, at a time when global uncertainties and headwinds are impacting the Indian economy.

“Serious discrimination towards Kerala”

“As far as Kerala is concerned, there is a sharp fall in the percentage in our divisible pool. We have requested the Union government to correct it,” the minister said.

Ahead of the Union Budget, Balagopal alleged “serious discrimination” towards Kerala in allocating funds from the divisible pool. He said at the time of the 10th Finance Commission, the states’ share from the divisible pool was 3.92%.

“Now, at the time of the 15th Finance Commission, we are getting only 1.92% from the divisible pool. There is a very serious discrimination towards us. This also leads to financial crisis in the state. We are eligible for getting more share from the divisible pool,” Balagopal said.

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He said Kerala is denied its due share, citing that the state has achieved development in areas like education, health, and other basic infrastructure facilities.

“Actually, we are facing second-generation problems. For developing from the existing system, we need more help,” the minister said and expressed hope that the Centre would take all this into consideration while presenting the Budget on February 1.

Extension for GST compensation period

Balagopal said state finance ministers, during their discussion with Sitharaman, have requested for an extension of the GST compensation period.

“There is a systematic error in the implementation of GST. The GST compensation period should be extended,” Balagopal said.

He said states have not been receiving the GST compensation since last July. Besides, Kerala has urged the Centre to change the pattern in sharing GST revenue between the states and itself.

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“We have requested that the GST revenue sharing between the states and the Centre should be expanded from 50:50 to 60:40 in favour of states,” Balagopal said.

“64% to Centre, 36% to states”

Citing the 15th Finance Commission’s observation that of the total income in the country, 64% is going to the Centre and the states are receiving only 36%, he said this is a huge gap that needed to be addressed.

Alleging that the fiscal freedom of the states are under question due to the policies of the central government, Balagopal said it was a very serious issue and it was the Centre’s duty to work on the concept of “very strong Union government and very happy state governments” under the principle of cooperative federalism.

The Kerala Finance Minister said more emphasis should be given to overall development of the country in the Union Budget.

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“We are expecting that some new kinds of projects will be there, which will enhance the employment opportunities and infrastructure facilities. We also hope that more fund allocation will be there for the states and more funding for supporting centrally sponsored schemes and, of course, new infrastructure projects and all,” the Kerala Finance Minister said.

Plea for infrastructure facilities

Balagopal said the state has placed a memorandum before the Centre, seeking more infrastructure facilities, including setting up of an AIIMS, industries, and new institutions for more employment generation.

“We are also expecting the Union government to give its nod to building Kerala government’s ambitious Silverline project to connect the states north to south through a semi-high-speed rail,” he added.

The Kerala Finance Minister also countered the argument from certain quarters that freebees given to the people by the states should be stopped, saying “If that is a pointer, I fear there will be further squeeze in the budgeting expenses for this.”

More funds for poor

Noting that extending assistance to poor and needy is a responsibility of the state, he said more funds should be allocated for that.

“We have requested the Centre to allocate more funds for extending social security programmes like MGNREGA, food security, health, and such areas,” Balagopal said.

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The Minister also expressed hope that the Union Budget would address the problems of NRIs, who face various issues, including huge air travel expenses, particularly during the festival seasons.

He said more programmes should be announced in the Budget to provide jobs to the Indian citizens who were forced to return from abroad after being rendered jobless during the COVID-19 pandemic.

Balagopal also sought more assistance to the plantation sector affected by falling prices of crops.

(With agency inputs)