Kerala Finance Minister Balagopal takes 'budgeted call' to take on Centre

In his budget, the senior CPM leader has called for joint resistance against policies that demolish the federal values of the Indian Constitution.
Kerala Finance Minister KN Balagopal (Photo | Facebook)
Kerala Finance Minister KN Balagopal (Photo | Facebook)

THIRUVANANTHAPURAM: A social media troll explaining the plight of Keralites paying tax on anything and everything is going viral.

"Despite assurances, the fuel charge was hiked by Rs 2. If one then wanted to opt for an electric vehicle, its tax too was revised, in addition to an increase in power charge. One cannot even sit idle at home, as property tax has gone up. So then, we think about going somewhere, but they now have a special cess for locked houses. If we consider selling it, the fair value is up by 20 per cent; Finally what if we think of getting a drink to drown all such woes? That too is gonna cost us," the viral social media post read. 

It anyway sums up what Finance Minister KN Balagopal termed measures to deal with the 'hard budget constraint', which he felt was caused by BJP-led central policies.

If the Governor's address gave an impression that the Left government had abstained from Centre-bashing, the budget has clearly proved this to be a mere fallacy. In his budget, the senior CPM leader has called for joint resistance against policies that demolish the federal values of the Indian Constitution.

Vocal in its criticism, the budget said centralization of power and disregard for states, especially Kerala, have increased unprecedentedly.

It termed the Centre's conservative financial policy as the biggest challenge to Kerala's alternative development model.

"We are not ready to abandon our alternative model or its virtues despite the hurdles posed by the Union Government. Kerala has been able to reach here, not without having to face innumerable hurdles. This land is witness to its legacy of taking head-on both the caste-feudal-landlord hegemony and colonialism," reads the budget.

Announcing that the Kerala model will not be abandoned, it even proposes a three-tier policy for the state government to take on the Centre. It called for joint resistance against policies that demolish the federal values of the Indian Constitution and reduce the fiscal space of states, and activities in coordination with other states to protect federal values.

Noticeably, unlike his predecessor Thomas Isaac, Balagopal neither opted for fancy announcements nor embellishments of the budget with additional paraphernalia. In a realistic approach to addressing the fiscal crisis caused by the previous UDF and LDF governments, he has gone for taxing sure-shot revenue sectors. However, it would have gone down well, had he complemented it with austerity measures too, observed political commentator J Prabhash.

"Though it's obviously a political move, it's a fact that the financial allocation from the Centre has been decreasing. They follow different yardsticks so that a consumer state like Kerala with high expenditure for social security, is unable to accrue benefits. But states that lag in education do benefit," he further pointed out.

The House witnessed protests from the Opposition benches, as placard-wielding UDF legislators raised slogans against what they termed an unrealistic budget laced with unscientific proposals. The sloganeering began well before Balagopal wound up his speech. Roji M John and M Vincent raised slogans, prompting newly crowned Speaker SN Shamseer to ask Roji whether he was trying to make his presence felt in the House.

"Kerala is being sidelined in the allocation of Centrally Sponsored Scheme also. Can anyone with a commitment to the people of Kerala justify this situation? On whose side do those who celebrate this disregard stand?"

Kerala is being taxed for its better performance like its best human development performance and SPG, said KJ Joseph, Director, Gulati Institute of Finance and Taxation.

"The anomalies in Centre-Stare relations need to be corrected. Now there's an incentive for non-performance. Kerala's growth in tax revenue is 34.8 % during the first 8 months of this fiscal which is much higher compared to other states except Maharashtra. The growth in the tax rate for the Union government is just 7.9 %. The Centre is also curtailing states' financial freedom," he said.

The Centre apparently is not practising what it preaches. "While maintaining a high fiscal deficit of 6.4 %, it stipulates the State maintain it at 3.5 %," Prabhash added.  

* During the 10th Finance Commission, Kerala's share was 3.875% of the divisible pool. By the time of the 15th Commission, it came down to 1.925%. A shortfall of around Rs 6700 crore due to a cut in the Revenue Deficit Grant

* Due to the cessation of GST compensation, shortfall of around Rs 7000 crore. Due to the central policy of treating public accounts as debt liability, a revenue loss of around Rs 10,000 crore per annum
* Policy of treating KIIFB, Social Security Pension Limited as state's liability limits borrowing capacity. There will be a shortfall of Rs 3100 crore. Due to restrictions on the market borrowing limit, there has been a shortfall of around Rs 4000 crore in resource mobilization.

* Kerala is sidelined in Centrally Sponsored Scheme also. 

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