Balagopal made the request in the pre-budget discussion attended by Union Finance Minister Nirmala Sitharaman.
Kerala Finance Minister KN Balagopal (X)
Kerala Finance Minister KN Balagopal on Saturday, 22 June, urged the Union government to announce a special package of ₹24,000 crore for the southern state in the Union Budget 2024-25 “to tide over the current liquidity stress” being faced by the state.
Balagopal made the request in the pre-budget discussion held in the national capital that was attended by Union Finance Minister Nirmala Sitharaman and Finance Ministers from other states.
He said that the state, which just started to recover from the drastic effects of repeated floods and Covid-19, was facing a very difficult time in managing its finances to meet its obligations.
With the cut in the state’s inter-se share from the divisible pool, reduction in the revenue neutral rate after the introduction of GST, the stopping of GST compensation and Revenue Deficit Grants and the newly introduced restrictions on borrowing ceilings, things are difficult for the state, he claimed.
Balagopal pointed out that the state took all possible measures to enhance its own tax revenue and non-tax revenue, but despite these efforts, the government “was going through a very serious liquidity crunch”.
The Kerala finance minister referred to the state’s contributions in various spheres, including start-up and innovation, human development index (HDI) and sustainable development goals (SDG) to keep up the national pride.
“Considering the state’s contribution in varied spheres in keeping up the national pride which includes but is not limited to HDI, SDG, start and innovation, a special package of at least ₹24,000 crore may be announced in the Union budget 2024-25 to tide over the current liquidity stress by scheduling it over a period of 2 years from 2024-25,” he said in his speech at the discussion.
Urging the Union government to review the restriction on open market borrowings, he said the state was currently borrowing much lower compared to the limits set for it.
“It is on account of changes introduced in the calculation of Borrowing Ceilings such as the inclusion of public accounts and the borrowings of state-owned enterprises. Hence, this policy has to be reversed.
“The state is losing about ₹5,710 crore each this financial year and the next fiscal year. This is due to the introduction of a new measure by the Union government, in retrospective effect, to cut the borrowing limit of the state for the borrowings of KIIFB and Pension Company done in the year 2021-22,” he said.
“Hence, the prejudicial decision with retrospective effect needs to be reversed.”
The minister also pointed out that Kerala has not been able to benefit from the welcome CAPEX facility announced in the earlier Union Budgets, which allowed the state to utilize the fund over and above the normal borrowing limit and with concessional terms.
Balagopal, in his speech, also said that Kerala was looking forward to a “substantial jump” in capital expenditure in the state.
On the Vizhinjam International Mother Port, he said it was a game-changing project for the country as a whole.
Therefore, apart from a direct investment of the Union government, the state also urgently needed a special capital investment of Rs 5,000 crore to fulfil Kerala’s part in the development of the port and the surrounding region.
Balagopal also requested another ₹5,000 crore for financing certain other infrastructure projects such as the ‘Tunnel Road link between Calicut and Wayanad’.
The minister claimed that the railway infrastructure in the state was on the verge of breakdown on account of the growing imbalance between traffic load and the infrastructure.
“Hence, we urge the Union Government to increase central funding for the development of transport infrastructure, including Roads, Railways, Metro and ports, as well as urban infrastructure projects in cities and towns.
“Kerala also needs additional train services, as many residents work in other states and a significant number of people travel to Kerala for jobs and tourism,” he added.
He, therefore, sought an early clearance of the semi-high-speed railway line project — Silverline — which is pending approval of the Union government.
The minister also said that Kerala was the only state which had spent 25 percent of the land acquisition cost of the National Highway widening, which amounted to around ₹6,000 crore.
“Kerala’s efforts to develop infrastructure and enhance social services intensified many fold in recent years, helping the state gain substantially higher-level indices in social and economic sectors, which in turn contributed to the country’s overall progress.”
Besides these, various long pending demands of the state like establishing an AIIMS in Kerala, starting an International Research Institute in Ayurveda at Kannur, enhancing the minimum support price of rubber to ₹250 and changing the GST revenue sharing mechanism from the present 50:50 ratio to 60:40 ratio in favour of the state governments were also raised in the discussion.
“I hope that the forthcoming Union Budget will consider these suggestions and long pending demands of Kerala state. I wish that the Union Budget may put forward a macroeconomic policy and fiscal consolidation measure with a view to uphold the true spirit of cooperative federalism,” he said.
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