Thiruvananthapuram: Kerala Chief Minister Pinarayi Vijayan has hit out at the Union Budget for completely ignoring the legitimate demands of the state, including the Goods and Services Tax (GST) compensation and Angamaly-Sabari railway line.
Even the demands of semi-high-speed corridor, raising the debt ceiling, hike in rubber subsidy, AIIMS for Kerala, more fund allocations for Public Sector Undertakings, speeding up the highway expansion, increasing the number of attaches in embassies in the Gulf countries, and expatriate rehabilitation found no mention in the Budget, Pinarayi pointed out.
Kerala Finance Minister Thomas Isaac too termed the Budget to be a huge disappointment for the state.
The Kerala CM said it was highly alarming to note the sharp decline in the state's share of the central taxes.
"It is not clear yet as to how big the decline is," Pinarayi said, hours after Union Finance Minister Nirmala Sitharaman presented the Budget in the Lok Sabha on Saturday.
"Only last month did the Centre disburse the aid to the states for natural disasters. Despite being one of the worst- affected states in the floods, Kerala was left out. The same political approach was taken against Kerala in the Union Budget," he added.
The Budget proposed levying 22 per cent tax plus surcharge on the cooperative societies. CM Pinarayi pointed that out this move would have a dangerous impact on the cooperative societies and financial institutions operated by them.
The Kerala CM warned that there could be terrible consequences of bringing in tax proposals that could eliminate the cooperative sector especially during a time when it has to be encouraged.
While pointing out the Budget proposed to sell more Public Sector Undertakings (PSU), Pinarayi highlighted that not enough money was allocated for the PSUs such as the Cochin Shipyard and Refineries to stay afloat.
He reiterated that the Centre had been constantly denying the state's share of the GST.
Further attacking the Union government, the CM said that it was going against the federal principles by trying to grab the state's rights in agriculture and land sectors.
While pinpointing on several of the Centre's steps such as the frequent exemptions given to the corporate tax sector, the absence of projects to increase agricultural produce, and the decision to sell off government stakes in the LIC, Pinarayi said that it was evident which side the government was favouring.
State has been ignored: Chennithala
Leader of the Opposition Ramesh Chennithala has said in a press statement that the Union Budget has completely ignored the State. It also added that the proposal to slash the State's share of Central taxes would further worsen the economic crisis impairing the State.
The Finance Minister presented nothing to address the economic downturn, revive the ailing agricultural department or generate employment.
‘Centre strangling the state’
Kerala Finance Minister T M Thomas Isaac too slammed the Union Budget, calling it a ‘war cry’ against the state.
“The cold shoulder given to Kerala is unprecedented. The Centre is deliberately strangling the state,” the minister alleged.
“The state share of the taxes has gone down to Rs 15,236 crore from Rs 17,872 crore in the previous fiscal, while the expectation was Rs 20,000 crore. This is historically the lowest-ever figure,” Isaac claimed.
The minister said that in the event of the central transfers reducing by more than Rs 5000 crore, the state would be forced to seek alternative means to fill this deficit.
“The country is going through a severe economic crisis. The Coronavirus pandemic is further aggravating it. If Chinese exports decline, the global economy would be adversely hit. However, the Union Budget fails to tackle any of these issues. The central government's expenditure and investments are on a downward trend. Compared to the previous year, the Centre will be spending Rs one lakh crore less this year.
“The Budget allocation for the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGS) has declined by Rs 10,000 crore. The allocation for the farm sector has remained the same as last year at Rs 1.5 lakh crore. But the previous year's allocation has not been mentioned in the current Budget to hide this fact,” he explained.
The Kerala Finance Minister warned that India's economic crisis is going to further deteriorate. "The corporates are gifted huge exemptions. Then citing a deficit of funds, public assets are sold off to the same corporates. If they had not been given so much sops in the first place, there would be no need to sell off the PSUs", the minister said.
Kerala’ GST share
About Kerala’s GST share, Isaac said, “Out of the IGST (Integrated GST) collected by the Centre, 50 per cent is the states' share and 50 per cent Centre's. In the GST council meeting, states demanded that their shares be distributed directly. But on the contrary, that amount was wholly transferred to the consolidated fund of the Union government. Once this happens, the allocation has to be as per the Finance Commission's recommendations.
“The state must get the 42 per cent share recommended by the Finance Commission as well as the 50 per cent share from the Centre. However, the Centre has adopted the stance that once this is given, any further transfers are subject to availability of funds from the compensation cess.”
Isaac said that the central government must be willing to honour the rightful demands of states.
“The central government is banking on its two-third majority in Parliament to get away with anything it deems fit to do. Only if the BJP suffers massive defeats in the state assembly elections, starting from Delhi, is there any hope for states to secure their rights,” Isaac added.