At the pre-Budget meeting Finance Minister Nirmala Sitharaman chaired in New Delhi on December 30, 2021, Kerala raised a set of demands to tide over the anticipated financial crisis in the State.
The State's Finance Minister, K N Balagopal, submitted the demands in writing as well, and if the Centre does not accept at least the major ones, Kerala will be in serious crisis. Following are the major demands:
Extension of GST compensation
The GST compensation to States from the Centre should not be stopped. Instead, it should be extended to five more years to help the States reeling under the onslaught of the COVID-19 pandemic. Kerala could not survive financially without the compensation.
Hike in Central share
Kerala's share from taxes, including income tax, from the Centre was 3.92%, before the 14th Central Finance Commission slashed it to 2.45%. The 15th Commission further cut the share to 1.92%, leading to a loss of about Rs 6,400 crore to the State. The Centre should allot additional shares to compensate for the loss.
Drop Cess, surcharge
The Centre, of late, has been collecting a huge amount from the public as cesses and surcharges. For some items, like fuel, the amount is higher than the tax, and the additional revenue thus generated is not devolved to the States. The Centre should withdraw such cess that unnecessarily place an additional burden on people.
Retain borrowing limit
The State's current borrowing limit is 4.5% of the State Gross Domestic Product (SGDP). However, the Central government-set conditions have to be met to borrow the complete eligible amount through the Reserve Bank. The Centre should scrap the conditions and retain the borrowing limit.
Raise Centre's share in Centrally-Sponsored Schemes
The allocation of Centre's share to States has been decreasing every year as per the Finance Commission recommendations. However, the Centre has not increased its share in Centrally -sponsored schemes. Kerala has been effectives rolling out Centrally-sponsored schemes, and hence the Centre should increase its share in implementing the projects.
Take over NHA
States are houldering the heavy responsibility of preventing the spread of COVID-19 and to treat those who are infected. Currently, the Centre is providing 60% of the amount for implementing the National Health Mission, while the States are pumping in the remaining 40%. The Centre should take over the entire expenditure.
Approve SilverLine project
Basic infrastructure should be developed to rejuvenate the State's economy. As part of developing basic infrastructure, Kerala is planning a 529.45 kilometre SilverLine project. The Centre should expedite the process to approve the project.
Package for foreign returnees
Considerable number of expats are returning to Kerala due to COVID-19 and economic slump in several foreign countries. The Centre should annouce a comprehensive rehabilitation package to help them float industries and commercial establishments.
Fund for manufacturing vaccine
Kerala is planning to develop and manufacture equipment and vaccines against viruses. Kerala wants to be a hub of research in healthcare. The Centre should ensure financial aid for such projects.
More focus on space research
Only 0.24% of the GDP is currently spent on space research and other related activities. Besides increasing the allocation for space research, the Centre should also increase the manufacturing of rockets and allied products at the Vikram Sarabhai Space Centre (VSSC) in Thumba, Thiruvananthapuram. Kerala can become a hub for space research and product manufacturing.
