Union government should have state-specific financial approach for development, says Kerala FM KN Balagopal

Balagopal emphasised that monolithic thinking about overall development is not practical and called for flexibility in the utilisation of CSS.


Published Jun 30, 2024 | 5:41 PM Updated Jun 30, 2024 | 5:41 PM

File photo of Kerala Finance Minister KN Balagopal.

By Manoj Rammohan

Seeking more funds to tide over the state’s financial woes, Kerala Finance Minister KN Balagopal on Sunday, 30 June, said the Union government should have a state-specific rather than a uniform financial approach towards states as each of them has different kinds of developmental activities.

Balagopal, part of the CPI(M)-led LDF which is in power for the second consecutive term in the southern state, emphasised that monolithic thinking about overall development is not practical and also called for flexibility in the utilisation of Centrally Sponsored Schemes (CSS) depending on the requirements of the state.

Flagging serious concerns about reduced central fund transfers and borrowing restrictions, Kerala has demanded a special package of Rs 24,000 crore in the upcoming Union Budget to tackle the liquidity stress.

Also Read: Kerala’s financial crisis artificially created by Union government

‘Monolithic thinking is not practical’

“A monolithic thinking about the total development and administration of the country is not practical in India because different states should be considered differently, keeping in mind the country’s whole development and unity…,” he told PTI in an interview in the national capital.

According to the senior CPI(M) leader, Kerala’s share from the divisible pool came down to 1.92 percent during the 15th Finance Commission period compared to 3.87 percent during the 10th Finance Commission.

He expressed hope that the Union government might look at the issues faced by the states very seriously because different state issues were very evident from the election results.

In the Lok Sabha polls, the BJP-led NDA came back to power for the third straight term but the BJP got fewer seats than expected.

Balagopal stressed that Kerala’s activities in terms of revenue management and generation are among the best and that the state has a very good number of social security measures as well as a very good Panchayati Raj system.

During the period between 2020-21 and 2023-24, the state’s tax revenue rose from around ₹47,660 crore to ₹74,258 crore while its non-tax revenue shot up from ₹7,327 crore to ₹16,318 crore.

Also, the state’s revenue deficit declined from ₹20,063 crore to ₹17,348 crore during the same period.

Also Read: Announce ₹24,000 crore special package for Kerala: Balagopal 

Blames Finance Commission

“The people and government of Kerala are being affected not because of their doings but because of the policy of the Finance Commission on dividing income among the states,” he said and hoped the Union government would take some positive steps that are specific to the state.

For Kerala, rapidly aging population which will require resource allocation for prompt elderly care, coastline erosion, disaster preparedness, flood management and man-animal conflict are among the crucial issues.

Against this backdrop, Balagopal said the state should have the flexibility in utilising CSS.

Citing an example, the minister said that when the central government was planning to provide toilets to every house, the state achieved the target much earlier. “Whether we have to wait for more time to get the next set of development. These are the issues”.

“Different states have different kinds of development activities, style… you cannot have a uniform deciding factor. In a country with diversities, there is a spirit of India that is unifying us. The difference of the state historically, traditionally that has to be kept in mind… how states are to be supported through different (approaches),” he said.

Listing out the financial challenges faced by the state, Balagopal said there has been a sharp cut in funds from the divisive pool, a reduction in borrowing limits and tax issues in terms of share post implementation of the Goods and Services Tax (GST).

On 27 June, he met Union Finance Minister Nirmala Sitharaman. While making various funding demands, Balagopal, in his representation, also said Kerala has been taking prudent measures and efforts to improve its finances, especially in terms of enhancing its own source revenues and controlling fiscal and revenue deficits.

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