THIRUVANANTHAPURAM: Kerala will have to face a drop of around Rs 32,000 crore in the share of central taxes and grants in the coming fiscals if the central government goes ahead with its current financial policies, said Finance Minister K N Balagopal.
After the 15th finance commission had reduced the states’ share of the divisible pool of taxes to 41 per cent in its interim report for 2020-21, the divisive pool of taxes dipped to Rs 5.5 lakh crore from Rs 6.8 crore, resulting in a loss of around Rs 3,000 crore state share.
If around 3.9 per cent was the state share in the 1980s, during the time of 14th finance panel, the state’s share of the divisive pool of taxes was 2.45 per cent which then reduced to 1,92 per cent in the time of 15th finance panel.
In short, if the state received a share of Rs 17,084 crore in 2019-20 fiscal, it came down to Rs 10,686 crore in 2020-21, a loss of around Rs 6,400 crore. Although it is estimated that the state would get a share of Rs 12,812 crore in 2021-22 fiscal, it is unlikely to get the estimated amount in the current scenario, he said.
So is the case with the revenue deficit grant. After the inordinate delay in providing GST compensation of Rs 12,900 crore, the state was given a sum of around Rs 19,000 crore as revenue deficit grant due to the intervention of former finance minister Thomas Isaac.
But this would also come down to around Rs 13,000 crore by next fiscal and further down to Rs 4,000 crore and finally nil in the ensuing years. So cumulatively, the state will lose around Rs 32,000 crore in the share of central taxes and grants in the coming years if the Centre pursues the current financial policies, he said.
However, the state is doing its level best to address its financial crisis. During Onam season, the state has infused around Rs 9,018 crore, including Rs 1,700 crore welfare pensions, Rs 800 crore bonus and festival allowance apart from Rs 5,715 crore wages and pensions, as part of reviving the cash-starved economy of the state. It is true that all these payments have to be cleared by the state at regular intervals.
But during this time of distress, the state met these expenses after borrowing money sticking to the borrowing limit of the state. Further, the state will have to ensure funds announced for its development projects, including Rs 69,343-crore KIIFB projects.
“This is not the case of Kerala alone. Almost all the states in the country are facing a similar situation and the Centre should stop the practice of curtailing the tax share of states. Instead it should address the tax evasion and non collection of various taxes,” he said.
Considerable drop
If the state received a share of Rs 17,084 crore in 2019-20, it came down to Rs 10,686 crore in 2020-21, a loss of around Rs 6,400 crore.
Although it is estimated that the state would get a share of Rs 12,812 crore in 2021-22 fiscal, it is unlikely to get the estimated amount in the current scenario, he said.
After the delay in providing GST compensation of Rs 12,900 crore, the state got around Rs 19,000 cr as revenue deficit grant due to the intervention of former finance minister T M Thomas Isaac.
This would come down to around Rs 13,000 crore by next fiscal and further down to Rs 4,000 crore and finally nil in the ensuing years.