Thiruvananthapuram: On the eve of the LDF Government's anti-Centre protest in Delhi, Chief Minister Pinarayi Vijayan seemed realistic about the losses inflicted on Kerala by the Centre. His finance minister K N Balagopal has been repeatedly stating that the Centre had stripped Kerala of a whopping Rs 57,000 crore this fiscal alone. However, at a press conference in Kerala House in Delhi on Wednesday to brief the media on his Jantar Mantar mission on February 8, the Chief Minister made no mention of the gargantuan figure, not even once.
Instead, he listed the areas, bullet-point style, where the Centre was undermining Kerala, and put out some figures. He did not bother to add up the figures. All the figures the CPM mentioned would not have made up Rs 57,000 crore either. Interestingly, the Chief Minister himself had used the figure with great indignation during the Nava Kerala Sadas public meetings.
There could be a reason why the CM abruptly avoided the figure. It was only a week ago that his finance minister was forced to admit in the Assembly that the Rs 57,000 crore he had constantly held up as a measure of the Centre's monumental neglect of Kerala was just a nominal figure, a number arrived at based on an unconvincing assumption.
It was Congress MLA Mathew Kuzhalnadan who first challenged Balagopal. Kuzhalnadan said the figure was only Rs 31,869 crore in the letter Balagopal wrote to his union counterpart Nirmala Sitharaman a few months ago. Also, Kuzhalnadan said even in this, a substantial sum of nearly Rs 28,400 crore was just a "wish list", an amount Kerala is asking as a favour from the Centre and not its entitlement.
Balagopal conceded that it was a "notional" figure. He said Kerala's share from the Centre's divisible pool of taxes had fallen from 3.8 per cent to 1.9 per cent. It was from Balagopal's "had Kerala received 3.8 per cent as its share, this is what the state would have got now" logic that the figure Rs 57,000 crore was conjured up.
This was a bit of a stretch as 3.8 per cent was Kerala's share some three decades ago, during the period of the 10th Finance Commission in the second half of the eighties. After this, post-liberalisation, more money came to states in the form of centrally sponsored schemes and grants-in-aid leading to lower transfers from the divisible pool.
In other words, Balagopal was using fiscal numbers that existed in the 1980s to extrapolate a figure for 2024. Even then, there is merit in Kerala's claim that the Centre is fiscally smothering Kerala. The Chief Minister listed some credible reasons.
One, the Centre has included the borrowings of KIIFB and KSSPL (Kerala Social Security Pensions Limited) in the state's annual borrowing limit even though the 15th Finance Commission has not recommended such an action. The CM said this had impacted Kerala's social welfare programmes and its attempt to boost infra spending.
Two, the Centre has blocked funds after Kerala rejected its demand to have the names of central schemes stamped on houses and hospitals constructed under Life and Aardram missions. The Chief Minister said the Centre funded just 30 per cent of houses constructed under Life Mission, and even this contribution was nominal; Rs 72,000 for rural houses and Rs 1.50 lakh for urban houses. Kerala government and local bodies provided the rest. For the upgradation of primary health centres and taluk hospitals, Kerala takes upon itself nearly 95 per cent of the cost.
Three, the finer details of centrally sponsored schemes, though they are carried out in areas under the state list, are prepared by ministries in Delhi.
Fourth, the Finance Commission is punishing Kerala for its achievements in per capita income and population control. Pinarayi said it was after the BJP came to power that the 1971 census was junked and the 2011 census was used in its place to decide the share of states. In the 2011 census, Kerala's human development indices, including population control, are exemplary. But this triumph also meant that Kerala did not require much hand-holding and, therefore, central assistance could be whittled down.
Five, after the BJP came to power the proportion of cesses and surcharges in the Centre's revenue mix had nearly trebled. In 2014-15, the year the BJP came to power, cesses and surcharges constituted 10 per cent of the total revenue. Last fiscal, it was 28.1 per cent. The problem for states is that the Centre is not obliged to share cesses and surcharges with them. On top of this, the 15th Finance Commission has reduced the share of states by one percentage point to 41 per cent.
Six, when GST became operational states had to surrender 44 per cent of their revenue. As for the centre, it was only 28 per cent. "Yet the GST collection is now shared equally between the centre and states. Most experts had called for a 60:40 ratio in favour of the states but the Finance Commission rejected this," Pinarayi said. It is in this context Kerala is seeking an extension of the GST compensation, which ended on June 30 last year.
Interestingly, Pinarayi was also not carried away by the occasion to endorse a southern coalition as advocated by Karnataka. He said all non-BJP governments were suffering, citing the examples of Punjab and Delhi.
