Kerala Finance Minister said the Union Budget was more about political survival than equitable development.
Published Jul 24, 2024 | 2:00 PM ⚊ Updated Jul 24, 2024 | 2:00 PM
The Union Budget 2024 is being called the “Naidu-Nitish Budget,” given the generous commitments to Bihar and Andhra Pradesh, where key political allies of Prime Minister Narendra Modi are in power. In Kerala, however, the sole BJP MP Suresh Gopi faces the prospect of having to offer explanations to those criticising the Budget for making next to no allocations for the state.
Kerala had earlier requested a financial package to offset losses incurred due to reduction in its debt limits for the fiscal years 2022-23 and 2023-24. The state’s debt limit is set at 3 percent of the Gross State Domestic Product (GSDP), with an additional 0.5 percent for the energy sector, making a total entitlement of 3.5 percent.
However, for 2022-23, the state was allowed only 2.44 percent, and for 2023-24, it was 2.88 percent. This has resulted in an annual reduction of approximately ₹15,000 crore in central tax share compared to the 14th Finance Commission period.
Kerala sought a special economic package of ₹5,000 crore for the Vizhinjam International Port project. With a total project cost of ₹8,867 crore, the state is covering ₹5,595 crore of the expense, while the central government’s contribution stands at only ₹818 crore.
Kerala had requested upward revision of the honorarium for various scheme workers, including ASHA and Anganwadi workers. The hope was that these adjustments would be reflected in the Union Budget. Despite the constraints imposed by the Union government, Kerala has continued to manage these financial responsibilities and liabilities.
Kerala Finance Minister KN Balagopal said the 2024 Union Budget was more about political survival than equitable development. He said the state’s financial claims had been neglected. “BJP leaders in Kerala promised significant changes, but the budget has resulted in a severe cut to Kerala’s allocation. The central ministers and MPs from Kerala need to advocate strongly against this approach and work collectively to safeguard Kerala’s interests,” he said, speaking to the media.
“A budget should include broad, inclusive plans that safeguard both the nation and its states. However, this budget disregards the majority of states and seem to serve only the NDA coalition’s interests. It reflects a shift away from cooperative federalism, with central government resources being used primarily to favour a few states aligned with its own interests,” he said.
“Kerala specifically requested a financial package of ₹24,000 crore to cover its entitled dues under the Fiscal Responsibility Act, but the central government has failed to address this. Additionally, critical projects like the Vizhinjam International Port and the long-awaited AIIMS institution have not received the necessary funding. Kerala is receiving only 21 percent of its total expenditure from central allocations, compared to 71 percent for Bihar and 47 percent for Uttar Pradesh. This widening gap highlights the need for the central government to rectify its approach and ensure fair distribution of funds to states,” he explained.
EM Thomas, a prominent author, educationalist, and former general secretary of the Kerala Economic Association, told South First that this Union Budget is a picture of failure.
“From the standpoint of federal finance, this Union Budget is a complete failure. While it offers significant benefits to the salaried class through reduced tax rates, it largely overlooks other sectors. The most critical flaw is its violation of federal finance principles, favouring only two states, Andhra Pradesh and Bihar. Even if these decisions have political motivations, they carry substantial economic implications, with mere statements made about agriculture and youth employment lacking real substance. The budget is below average compared to our expectations, especially concerning Kerala. The state’s name wasn’t even mentioned (in the Union finance minister’s speech).”
He pointed: “Kerala is facing a serious economic crisis, and we had hoped for more support. The central government should provide some form of assistance to help us recover from this financial trouble. Another significant issue is industrial development, which relies on both the private and public sectors. The budget did not allocate substantial resources for industries. Despite numerous proposals, funding was only earmarked for two specific states, highlighting a major flaw in the budget.”
Thomas further elaborates: “Regarding employment, Finance Minister Nirmala Sitharaman made very promising statements, but did not address the issue of public sector recruitment. Instead, the focus was on provident funds and internships. What young people need are permanent jobs, the government should implement projects that generate sustainable employment. There are many advantages for the salaried and saving class. However, the total number of salaried individuals is relatively small. At the same time, poverty eradication programmes did not receive sufficient attention. There is nothing in the budget to uplift the poor, and senior citizens have also been neglected. For a state like Kerala, where the demographic trend is different and the percentage of elderly people is increasing day by day, their care should be a consideration.”
BJP MP Suresh Gopi faced questions from the press on Tuesday, as the budget announcements were made. He refuted claims that Kerala had been neglected by the Union finance minister and explained that a mere 150 acres was not sufficient for setting up an institution like the All India Institute of Medical Sciences.
The state government had, two years ago, agreed to grant 150 acres in a village in Kozhikode district for the setting up of the AIIMS. Ahead of the Lok Sabha polls, Gopi had claimed that the AIIMS announcement was likely in this budget.
Prime Minister Narendra Modi visited Kerala five times in four months, ahead of Lok Sabha polls. This extensive campaigning contributed to film star Suresh Gopi winning as the party candidate from the Thrissur Lok Sabha constituency, by a significant margin. Gopi was also appointed Minister of State in Modi’s third cabinet.
During his election campaign, Gopi disclosed that he had requested the BJP leadership to ensure that cabinet ministers holding five specific portfolios in the new cabinet would be open to his suggestions for Thrissur’s development.
Attempting to defend the Union budget, Gopi said on Tuesday, “What kind of push has been given to areas where employment opportunities are being created for the youth!”
(Edited by Rosamma Thomas)
(South First is now on WhatsApp and Telegram)
