Kerala to host conclave of 5 Opposition-ruled states on fiscal issues

Kerala will host a conclave of five Opposition-ruled states — four from South India and Punjab from the North — to discuss strategies for addressing their fiscal needs in the upcoming 16th Finance Commission, state Finance Minister K N Balagopal announced on Thursday (September 5).

In addition to the Left-ruled Kerala and AAP-governed Punjab, Tamil Nadu (DMK) and the Congress-ruled states of Karnataka and Telangana will participate in the conclave.

The move by the Left government is seen as an effort to bring together the Opposition-ruled states to strengthen their bargaining position with the BJP-ruled Centre. Last year, the state had filed a suit in the Supreme Court against the Centre for imposing limits on its borrowing capacity.

Balagopal said that the conclave, which Kerala Chief Minister Pinarayi Vijayan will inaugurate on September 12, aims to 'protect and strengthen' the country's cooperative and fiscal federalism.

Attendees

Besides himself, Telangana Deputy Chief Minister and Finance Minister Bhatti Vikramarka Mallu, Karnataka Revenue Minister Krishna Byre Gowda, Punjab Finance Minister Harpal Singh Cheema, Tamil Nadu Finance Minister Thangam Thennarasu and Leader of the Opposition in the Kerala Assembly V D Satheesan will also take part in the conclave, Balagopal said.

The minister said that officials, including finance secretaries of all five states and several subject matter-related experts, like former Economic Advisor to the Central Government Arvind Subramanian, will also attend.

He further said the conclave was being hosted by Kerala at a time fiscal federalism in the country was under challenge to a great extent.

"The main objective of the conference is to conceptualise the developmental and financial issues being faced by the states and present them before the 16th Finance Commission.

"A healthy Centre-State relationship requires fiscal stability of the states," Balagopal said.

"Unfair methods of distribution of funds"

The minister contended that the Union government was taking a completely different stand by adopting "unfair methods of distribution of funds" to the states.

He also contended that the Centre collects a huge amount of revenue from the states as cess and surcharge, which is not put in the divisive pool. Therefore, the states do not get a share of that amount, which is several lakhs of crores of rupees.

In 2011-12, the share of cess and surcharge in Central government revenue was 9.4 per cent and by 2022-23, it had gone up to 22.8 per cent, he said.

As a result, the states get only 29.6 per cent of the Centre's revenue as against the recommendation of 41 per cent by the 15th Finance Commission, Balagopal contended.

Discriminatory approach

The minister also alleged that the discriminatory approach of the Centre also exists in the matter of borrowing rights of the states.

He further said that the state should receive the tax share it is eligible for and that grants to local bodies should be increased in a timely manner.

Kerala is also eligible for special additional assistance due to its emphasis on welfare activities, he said.

"Various other states are also facing this kind of financial discrimination. All these things will be part of the discussion in the conclave," he said.

(With Agency inputs)