THIRUVANANTHAPURAM: The state government has urged the 16th Finance Commission to give due weightage for population control and principles of equality and justice while fixing the horizontal devolution, the distribution of central tax share among states. The government’s memorandum to the FC said the share of states from the divisible pool should be increased to 50% and a cent percent increase in the Union government’s contribution to the State Disaster Response Fund.
The visiting 16th Finance Commission team led by its chairman Arvind Panagariya on Tuesday held consultations with Chief Minister Pinarayi Vijayan and his cabinet colleagues and representatives from different sectors. The commission has an open mind and the demands of the state would be studied, Panagariya told mediapersons later.
Panagariya said the commission, so far, visited 14 states and all of them demanded a share from the cess and surcharges collected by the Union government. Terming it as a complicated issue, the chairman said it was a “response” by the Union government when its fiscal space was reduced. “It was a response when the centre’s share in vertical devolution declined from 32 pc during the 13th FC to 42 pc in the 15th FC,” he said.
The chairman also justified the Union government’s restrictions on borrowings by state governments. Macroeconomic stability is the responsibility of the central government. If the state owes anything, the centre has the right to impose restrictions, he said.
Panagariya hailed the state for devolving a high share of revenue to the local self-governments. The local self-governments are performing well.
Kerala’s another major demand was to provide a share to state governments from non-tax resources of the centre like profit share from public sector enterprises, spectrum auction, profit share from the Reserve Bank of India and PSU divestment.
The state urged the 16th FC to ask the Union government to amend the Constitution for this. States which face revenue loss in the sanction of grants as per Article 275 should be given revenue deficit grant. A fixed portion of the state government’s revenue should be allocated to local self-governments. The Union government should provide Rs 13,922 crore to the SDRF considering the challenges faced by the state like coastal erosion, landslide, and intense rains.